Returns in May: All equity funds take a hit

KARACHI: All equity-based mutual funds posted negative returns in May on the back of a sharp decline in trade volumes on the Karachi Stock Exchange (KSE).

According to data compiled by the Mutual Funds Association of Pakistan (MUFAP), each of the 22 mutual funds that invest mainly in listed companies posted a decline in its net asset value last month.

The performance of stock funds was largely in line with the overall direction of the share market that performed poorly in May.

The KSE-100 Index was at 33,056.79 points at the end of May, down 1.99% from the beginning of the month when it stood at 33,729.96 points. The KSE-100 Index is typically the benchmark for most conventional equity funds operating in the country.

Only three stock funds could outperform the benchmark index, although their absolute returns at the end of May remained in the negative zone. Funds outperforming the benchmark index last month were AKD Opportunity Fund (-0.08%), MCB Pakistan Stock Market Fund (-1.04%) and PICIC Energy Fund (-1.71%).



According to BMA Capital, the participation in the stock market remained dry last month with average daily turnover declining 39% month-on-month to 168 million shares. The value of traded shares also decreased 38% on a monthly basis to $87 million with foreign participation coming down 56% to a net inflow of $15 million over the same period.

“The dull performance of the market can primarily be attributed to uncertainty among investors pertaining to the upcoming federal budget,” BMA Capital research analyst Affan Ismail said, adding that the imposition of additional duties and a lack of clarity on capital gains tax rates remained a key concern for investors in May.

Mutual funds with exposure in equities have faced volatility in recent months because of uncertainty on the Karachi bourse. In contrast with the last month, most stock funds had outperformed the benchmark index in April when the KSE-100 Index shot up 11.5% on a monthly basis.

But the outstanding performance of stock funds in April had followed disastrous returns in March when each of the 22 equity-based conventional mutual funds tumbled in the wake of the biggest one-month decline (10.1%) in the KSE-100 Index.

Published in The Express Tribune, June 2^nd, 2015.

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