Pakistan stock market: Not really a gambling den

11 out of 25 equity-based funds outperform benchmark index.

KARACHI:

Cynics would like you to believe that Pakistan’s stock market is a gambling den where unsuspecting small investors lose their life-long savings to a bunch of rich, deceptive market players.

But the fact remains that tens of thousands of small investors have more than doubled their investments in the last two years through professionally managed equity mutual funds.

Mutual funds continued to post healthy returns in 2013 with 11 out of 25 equity-based funds outperforming the benchmark index last year.

As on January 1, best-performing equity fund during the last 365 days was National Investment Unit Trust, which posted absolute returns of 68.42%. It was followed by AKD Opportunity Fund (65.49%), JS Large Cap Fund (64.58%), JS Growth Fund (64.23%), Safeway Mutual Fund (63.77%), Asian Stocks Fund (60.75%), JS Value Fund (60.58%), PICIC Stock Fund (55.03%), Crosby Dragon Fund (53.68%), ABL Stock Fund (50.48%) and United Stock Advantage Fund (50.07%).

JS Islamic Fund (54.1%) and UBL Shariah Stock Fund (52.02%) were the two of the six Islamic equity funds which have outperformed the benchmark index and are operational since the last 365 days.

According to global financial news service Bloomberg, the Karachi Stock Exchange (KSE) was the 10th best stock market in 2013 with its benchmark index posting an annual return of 49.4% in rupee terms and 37% in dollar terms, compared to an increase of 48.9% in 2012 while 37% was the return in dollar terms respectively.



The mutual funds remained main sellers during 2013 with a net sale of $227 million, according to AKD Securities.

Speaking to The Express Tribune, Mutual Funds Association of Pakistan (MUFAP) Chief Executive Officer Mashmooma Zehra Majeed said equity funds generally sell securities to either book gains or meet redemption requests from clients.

“A mix of both could be the reason for the equity mutual funds being net sellers in the market in 2013,” she said, noting that many fund managers may have realised capital gains in their portfolios during the period.

“Moreover, as the equity market broke new barriers, investors have redeemed to book their profits as can be seen from the net redemptions in the equity mutual funds,” she said, adding that securities must have been sold to meet those redemptions.

Assets under management (AUM) of mutual funds amounted to Rs373.6 billion in November according to the latest figure provided by MUFAP. Compared to Rs329.8 billion at the end of the corresponding month previous year, the industry AUM shows an annual increase of 13.25%.

Published in The Express Tribune, January 2^nd, 2014.

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