Currently, Al Meezan Investment Management is the only AMC that offers an Islamic capital protected fund, which was launched in July 2011 with duration of three years and six weeks. PHOTO: FILE
KARACHI:
NBP Fullerton Asset Management (NAFA) is going to launch an Islamic capital protected fund next month, according to company CEO Dr Amjad Waheed.
NAFA will be the second Pakistani asset management company (AMC) to launch an Islamic capital protected fund, which invests only in Shariah-compliant securities while promising 100% capital protection on maturity.
Speaking to The Express Tribune in a recent interview, Waheed said the upcoming fund will have a tenor of 24 months.
Currently, Al Meezan Investment Management is the only AMC that offers an Islamic capital protected fund, which was launched in July 2011 with duration of three years and six weeks. Its annualised return since inception has been 13.7%, which is slightly higher than the benchmark of 13.6%.
Given that the only Islamic capital protected fund had assets under management of Rs503 million in August – about 1% of the total assets of Rs48.1 billion managed by Al Meezan Investment Management, Waheed said the market for such Shariah-compliant investment avenues is still largely untapped.
While the concept of Islamic capital protected funds may not have kicked off in Pakistan yet, conventional funds that seek to ensure the protection of capital while trying to maximise returns are slowly gaining popularity in the country as far as the number of funds are concerned.
For example, UBL Funds launched a 24-month Principal Protected Fund II in July that offered investors up to 100% exposure to the equity market while ensuring their principal amount remained protected. As on September 9, it had assets of Rs790.1 million.
The same asset management company introduced Principal Protected Fund I in February 2012 that has posted a return of 31.2% in the last 365 days, according to the Mutual Funds Association of Pakistan (Mufap).
The two principal protected funds being managed by UBL Funds fall in the category of ‘fund of funds’, according to Mufap.
Returns on the two conventional capital protected funds currently available to investors – ABL AMC Capital Protected Fund and IGI Capital Protected Fund – during the last 365 days have been 12.8% and 1.5%, respectively. As on September 9, total assets of all conventional and Islamic funds that offer principal protection stood at Rs2.4 billion, which is less than 1% of the total size of the country’s mutual funds industry.
“The fact that we are a subsidiary of the National Bank of Pakistan certainly increases our credibility,” Waheed said. NBP has a 54% stake in NAFA while stakes of Fullerton Fund Management and Waheed stand at 36% and 10%, respectively.
One of the largest Pakistani AMCs, NAFA currently manages assets worth Rs46 billion. Its assets were only Rs13.4 billion in June 2010, which translates into an annualised growth rate of 50.8% in the last three years.
“The bank’s name gives people comfort that their fund manager won’t run away with their money... that discipline will be observed in a bank-owned asset management company.”
Published in The Express Tribune, September 10th, 2013.
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