Arif Habib features among world’s best performing equity funds

Published: March 21, 2013
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Three funds run by the company were among world’s 100 best in 2012.

Three funds run by the company were among world’s 100 best in 2012.

KARACHI: It is quite a big deal for an asset management company (AMC) to have one of its funds ranked among the country’s top performing equity funds. Having one’s fund rated as one of the best performing equity funds worldwide is an even bigger achievement.

But no feat could possibly be more astonishing for a Pakistani AMC to have as many as three of its funds included in the list of 100 best performing equity funds of the world in a single year. Arif Habib Investments – a subsidiary of MCB Bank – did all of the above in 2012.

According to Thomson Reuters Lipper, which provides information and commentary on the mutual funds industry worldwide, 15 out of the 100 best performing equity funds in 2012 belonged to Pakistan.

Three of these 15 funds – namely, Pakistan Pension Fund-Equity Sub Fund (60.3% returns in 2012), MCB Dynamic Stock Fund (54.5%) and Pakistan Islamic Pension Fund-Equity Sub Fund (55.7%) – are managed by Arif Habib Investments.

The analysis of Thomson Reuters Lipper is based on data from 27,431 global equity funds that were actively managed in 2012.

As on March 21, assets under management of Arif Habib Investments were Rs34.9 billion, which means that the company enjoys a share of 11.1% in total assets of the mutual funds industry of Pakistan.

Speaking to The Express Tribune in an interview, Arif Habib Investments CEO Yasir Qadri said less than 10% of his company’s assets under management are currently invested in equities. The share of fixed income funds that are moderately risky and offer lower returns than equity funds is 42%.

The rest of the company’s assets under management are invested in money market funds, which offer low but guaranteed returns, he added.

Triggers

Qadri believes one major reason for better corporate results in many KSE-100 Index companies during 2012 is rupee depreciation, which benefitted export-oriented and energy-sector firms in particular. He adds the government resorted to heavy borrowing from the central bank consistently for many years, which inadvertently created liquidity in the system and eventually pushed stock prices up.

“Markets perform well as long as there is liquidity. In a perverse kind of way, rupee depreciation as well as government borrowing helped our market grow in 2012,” he observes.

Future outlook

Like most stock market commentators, Qadri believes there is a good chance the KSE-100 Index may keep surging in coming months. However, the reasons he cites for a further rise in the benchmark index are quite different.

“The single largest variable will be the new government’s handling of fiscal issues. If it continues to exhibit fiscal irresponsibility, I predict the market will keep performing well,” Qadri says, adding the index may touch 24,000 points in this scenario.

“The mismatch of expenses and revenues will be dealt through borrowing from the central bank. Thus, the system will remain liquid, and the rupee will keep depreciating. Overall, it will be miserable for the economy, but may not be so bad for the market,” he says.

In the best-case scenario, Qadri says Pakistan may join the IMF programme, resulting in foreign lenders and donors injecting liquidity into the economy.

“Pakistan may get funding for mega development projects, which will create jobs and generate economic activity,” he says, adding such a scenario will be good for the market as well as the economy.

Alternatively, if the new government happens to be fiscally responsible, it will try to minimise the fiscal imbalance by increasing revenues and/or decreasing expenses. “In this case, while taxpayers will be made to pay higher taxes to increase revenues, the most likely cut on the expenditure side will be in the Public Sector Development Programme,” he says, adding such a policy will be bad for the market at least in the short run.

“As analysts, our job is to keep a close watch on developing stories to understand what the likely scenario will be. It will not be in black and white. There will be shades of grey,” he says.

Published in The Express Tribune, March 22nd, 2013.

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Reader Comments (6)

  • MM
    Mar 22, 2013 - 12:41AM

    The remarks made by Mr. Qadri about KSE outlook do not make any sense. “Miserable for the economy but not for the market…???” are you serious. its not the liquidity in the system that matters its actually the savings and then investing those savings that gives real support to the market. If fiscal irresponsibility continues during next govt and inflation remains on higher side what do you suggest, ppl will keep investing in stock market…???

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  • HH
    Mar 22, 2013 - 9:39AM

    …mismatch of expenses and revenues will be dealt through borrowing from the central bank. Thus, the system will remain liquid…

    If the system is that liquid, why SBP always has to come and inject liquidity in the system through OMOs??

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  • AAH Soomro
    Mar 22, 2013 - 10:08AM

    Dear Publisher,

    Indeed, the information presented above is factual and verifiable. However, care must be exercised in depicting ONLY Arif Habib as the Top Performing Equity Fund Managers of Pakistan. There were several other large-sized Funds which have achieved the feat comfortably and thus, should be laudable.

    Below is the summary of 100 Top Performing Funds in the World:

    4) Golden Arrow Selected Stock Fund – 105.29%
    18) Safeway Mutual Fund 18th – 74.23%
    26) NAFA Stock Fund 26th – 69.4%
    32) AKD Opportunity Fund 32nd – 65.82%
    42) JS Pension Savings Fund – Equity Sub Fund 62.59%
    45) Asian Stocks Fund Limited – 61.07%
    47) Atlas Stock Market Fund – 60.69%
    51) JS Growth Fund 51st – 60.43%
    52) Pakistan Pension Fund – Equity Sub Fund – 60.31%
    80) Atlas Pension Islamic Fund – 57.61%
    90) Atlas Pension Fund – 55.93%
    91) Pakistan Islamic Pension – 55.70%
    96) ABL Stock Fund – 54.39%
    99) JS Islamic Fund – 54.07%

    This is for readers to have an impartial bipartisan picture.

    Best,
    AAH Soomro
    Fund Manager – JS Islamic Fund
    JS Investments Limited

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  • Yusuf
    Mar 22, 2013 - 12:39PM

    I like Arif Habib Investment approach toward structuring value and growth funds. I have Benefitted from Arif Habib Closed End and Open End Funds.

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  • just_someone
    Mar 23, 2013 - 1:35AM

    As the gentleman from JS said, there are a lot of funds that are also in that list. WHY? Well because the Pakistani market has improved more than almost any market in the world hence pushing all Pakistani focused funds to the top automatically. This wasnt because these funds did anything great, its just that the market did great.
    All of this is honestly fluff. What matters is is the gains that have been made can be sustained, i.e. will the market shed all the gains it has made in the last year?

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  • A. Khan
    Apr 16, 2013 - 6:40AM

    That is great news. Unfortunately, I couldn’t find Arif Habib’s name on the Lipper website award list. Here is the link : http://excellence.thomsonreuters.com/award/lipper

    I hope this is not the same case as almost all food companies in Pakistan having won some dubious “international quality award”.

    Someone please double check the link and tell me I am wrong on this.

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