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[Amin Khan]

Mutual funds up 15% in 1H, down 5% MoM in Dec-11
present excerpt of our detailed note on the local mutual funds industry titled ‘Invest Guide’. To be released shortly, the report discusses domestic mutual funds’ performance for Dec-11, 1HFY12 (Jul-Dec11) as well as for CY11 (Jan-Dec11).

Mutual funds rise 15% YoY in 1HFY12, fall 5% MoM in Dec-11
During 1HFY12, the local mutual funds industry showed a decent growth of 15% YoY in terms of the size, which has been over and above the 12% YoY growth during 1HFY11. Open-end funds rose by 19% YoY, reaching at Rs267bn (USD3.05bn), while closed-end funds showed a significant decline of 21% YoY to settle at Rs20bn (USD0.23bn). In Dec-11, local mutual funds saw redemption of 5% MoM, with major decline of 12% MoM witnessed in the money market funds’ category, which clocked in at Rs105bn (USD1.20bn). Dec closing seems to be the main reason behind the industry-wide decline, as the banks and other financial institutions usually pull out funds from their investments especially from their short-term fixed income instruments to keep their balance sheets in decent shape. Equity related funds continued their declining trend in line with the negative spell that continued at the local bourses of the country. On QoQ basis, during 4QCY11, the mutual funds rose by 16% (10% QoQ in 4QCY10), with a solid total increase of 29% YoY during 2011 (against decrease of 1% YoY in CY10).

Income funds’ size elevates by 41% in 1HFY12, thanks to new entrants
The size of the fixed income funds’ category increased by a massive 41% YoY during 1HFY12 (Jul-Dec11) to reach at Rs55bn (USD0.63bn), with meager depreciation of less than 1% on MoM basis. However, on a cumulative basis, the size of the category appreciated by a healthy 30% YoY in CY11, primarily owing to additions of four new income funds in CY11.

MM funds down 12% MoM, up more than 100% in CY11
After witnessed a tremendous growth in size during the last 11 months of CY11, the money market funds category is showing a decline of 12% MoM to reach at Rs105bn in Dec-11. Major decline witnessed in the size of ABL Cash Fund, which declined by 45% MoM. Dec closing is a main reason for decline in the fund sizes of the category during the month. However, during CY11, the money market funds category increased by more than 100% with handsome growth of 36% in fund sizes during last 6MFY12 (July-Dec11).

Equity funds remains dependant to the KSE100 index movement
Equity Funds category mainly dependant to the equity markets of the country and equity markets remained in the negative zone during CY11, the equity funds also declined by 11% as against the KSE100 index negative movement of 5.5% during the year. In Dec-11, the equity funds declined by ~4% and last 6MFY12, the equity funds size declined by 15%.
(InvstCap)

[Amin Khan]

Mutual Funds up 37% in 7MFY12

Pakistan mutual funds industry titled ‘Invest Guide’, highlighting local mutual funds performance for the month of Jan-12 as well as 7MFY12 (Jul-Jan12) period.

Mutual funds up 37% in size in 7MFY12, with 20% appreciation in Jan-12
After having faced a marginal decline of 5% MoM in Dec-11, the local mutual funds industry rebounded well and showed a healthy double-digit growth of 19% MoM during very first month of the new year 2012, to reach at ~Rs342bn (USD3.79bn). Amongst two broad categories, open-end funds’ size rose 20% MoM while closed-end funds grew only 6% MoM during Jan-12, to close at Rs321bn (USD3.56bn) and Rs21bn (USD0.23bn) respectively.
During 7MFY12, total size of the mutual funds industry revealed a remarkable performance with a quantum leap of 37% since Jun-11, mainly on account of fixed income funds and money market funds growing by a massive 117% and 62% during 7MFY11 to reach at Rs84bn (USD0.93bn) and Rs125bn (USD1.38bn) respectively. As usual, open-end funds, which contribute 94% of the total size of the industry, appreciated by a solid 43% during 7MFY12.

Income funds show huge growth, money market funds rebound strong
During Jan-12, the fund size of the fixed income funds’ category lodged a huge growth of 53% MoM to close at Rs84bn (USD0.93bn). Fund-wise probe in the asset growth reveals that, ABL-Government Securities Fund (ABL-GSF) was able to append Rs30bn (USD0.33mn), almost double from the previous month’s figures, to close at Rs31.5bn (USD0.35mn) in Jan-12. As such, during 7MFY12, the income funds category showed appreciation at a massive scale of 117%, mainly backed by ABL-GSF (launched in Nov-11).

Money market funds rebound strong in Jan-12, jumps ~20% MoM
The money market funds category, after showcasing a decline of 12% MoM in Dec-11, rebounded well in Jan-12 with 19% MoM growth reaching Rs125bn (USD1.38bn). As we mentioned in our last update, the reason behind the decline in money market assets was the year-end factor. During 7MFY12, the size of the money market funds surged by 62%. Out of Rs20bn (USD0.22mn) added to the size of the category in Jan-12, 93% of the incremental funds were contributed by ASK-CF, ULPF, and ABL-CF combined, adding their respective portions ~Rs10bn, ~Rs5bn, and Rs4bn to the asset size of this category in Jan-12.

Equity funds improve amid better performance of the local bourses
Upward march in the KSE100 index yielding 4.6% returns in Jan-12 provided support to the equity funds as the size of this category also appreciated by 6% MoM, settling at Rs47bn (USD0.52mn). However, during 7MFY12, the equity funds category still stood with cumulative decline of 9% since Jun-11.

Amongst equity funds, during 7MFY12, ABL-Stock Fund (ABLSF) and Atlas Stock Market Fund (ASMF) yielded 6.3% and 3.7% respectively, outperforming the index return of -5%. While, in Jan-12, highest return was earned by ASMF with 12.1% followed by ABL-SF with 10.0% return as against the KSE100 and KSE30 returns of 4.6% and 9.8%, respectively.
(InvestCap)