Negative return: All equity-based mutual funds feel September heat

Losses range between 4.9% and 8.8%; benchmark 100-index was down 7.02%

KARACHI:

Each of the 21 mutual funds that invest mainly in listed companies posted a negative return on a month-on-month basis in September.

According to data compiled by the Mutual Funds Association of Pakistan (Mufap), all equity funds posted a decline ranging from -4.9% to -8.8% in their net asset values last month.

The wholesale poor performance by equity funds in September was in line with the sharp fall in the Karachi Stock Exchange (KSE)-100 Index over the 30-day period.

The KSE-100 Index was at 32,287.4 points at the end of September, down 7.02% from the beginning of the month when it stood at 34,726.5 points. The KSE-100 Index is typically the benchmark for most conventional equity funds operating in the country’s capital market.

The worst performing equity funds last month were MCB Pakistan Stock Market Fund (-8.8%), AKD Opportunity Fund (-8.75%), Atlas Stock Market Fund (-8.07%), HBL Stock Fund (-7.29%) and JS Large Cap Fund (-7.28%).

Equity funds that performed relatively better than others, despite posting a negative return on a month-on-month basis, included Crosby Dragon Fund (-4.9%), PICIC Energy Fund (-5.15%) and ABL Stock Fund (-5.22%).

The performance of those equity funds that invest solely in Shariah-compliant stocks was not any better than their conventional counterparts last month. Each of the 13 such funds posted a loss in its net asset value on a month-on-month basis, with the absolute monthly decline ranging from -4.56% to -6.45%.

The worst-performing Islamic equity fund in September was Atlas Islamic Stock Fund (-6.45%), followed by MCB Pakistan Islamic Stock Fund (-6.37%) and JS Islamic Fund (-6.1%).

According to KASB Securities, the main “sentiment dampener” in September was the corruption probe that allegedly involves big market players. In addition, incessant foreign institutional outflow from the KSE also limited the scope of value buying, it said. Net foreign institutional outflow of funds clocked up at $22.4 million in September.

Local mutual funds also liquidated their positions in the share market last month in line with foreign institutions. They remained net sellers of shares worth $18.4 million in September, data from National Clearing Company Pakistan shows.

Lack of enthusiasm in the stock market pulled down the average daily turnover and average traded value by 40% and 39%, respectively, on a month-on-month basis in September.

Data compiled by AKD Securities shows that each of the six top sectors in terms of market capitalisation posted a negative return in September. These sectors include energy exploration and production (-12.9%), banks (-9.3%), chemicals (-8.5%), food processing (-5.25%), construction and materials (-5%) and personal goods (-3.6%).

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

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