Income funds decreased by three per cent, Islamic income funds fell two per cent while money market funds shined, growing seven per cent on a monthly basis.
The industry’s size remained more or less constant at Rs173 billion in August.
The performance of money market funds rose to a one-month industry average of 11.23 per cent in August to September as a result of the interest rate hike in July. Cash funds continued to have major allocations to government securities in August, as all money market funds except for HBL MMF maintained more than 50 per cent exposure in treasury bills. Cash fund category remained strong as money flowed into the industry increasing assets under management by seven per cent to Rs44.4 billion.
Equity category: No return
Equity funds posted negligible returns over the month as the KSE-100 rose by just under 1 per cent. Average returns for 6M and 12M were minus 10 per cent and minus 5 per cent as compared to KSE-100 returns of minus 1 per cent and 2 per cent for the same tenure. Two of the 15 equity funds were only able to outperform the KSE-100 index.
Islamic money market: Meezan has company
Meezan Cash Fund was previously the only fund in this category with an asset size of Rs5.9 billion in August. However, ABL ICF was introduced in August and had an asset size of Rs347 million by month-end. Due to the lack of investment avenues available to Islamic money market funds, this category is currently restricted to only investing in Islamic bank deposits. Fixed income fund category decreased by three per cent in the month to Rs56.6 billion, perhaps because investments went from more risky income funds to safer shorter tenure cash funds. Returns over the month were largely variable as funds were affected by write-backs as well as Term Finance Certificate (TFC) pricing volatility.
Published in The Express Tribune, October 5th, 2010.
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