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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)

[Amin Khan]

Mutual funds industry crosses Rs350bn mark!
An excerpt of our detailed report on local mutual funds titled ‘Invest Guide’ analyzing industry performance for Feb-12 as well as 8MFY12 period.

Mutual funds industry inches up 5.6% in Feb-12, 44% in Jul-Feb12
Pakistan's mutual funds industry while continuing its upward trajectory appreciated by further 5.6% MoM in Feb-12, to cross the Rs350bn mark and reached at Rs360bn (USD3.96bn), as compared to Rs342bn (USD3.76bn) a month earlier. Open-ended funds’ size appreciated by 5% MoM, while that of closed-end funds’ grew by 6% MoM to reach Rs338bn (USD3.71bn) and Rs22bn (USD241mn), respectively. During the month, major growth was witnessed in the money market funds category, which rose by 10% MoM to close at Rs138bn (USD1.52bn) in Feb-12. Islamic equity funds also followed the suit and appreciated by 6% MoM against 8% MoM surge witnessed in local equities market.

During 8MFY12 period (Jul-Feb12), mutual funds industry showed a healthy growth of 44% since Jun-11 closings, when the entire industry stood at ~Rs250bn (USD2.90bn). Open-end funds increased by a solid 50% while closed-end funds’ size declined by 11% since then.

Income fund size stagnant, yields lower in Feb-12
The income funds category withheld almost the same levels in Feb-12 as earlier, at Rs84bn (USD923mn). However, on a cumulative basis during 8MFY12, the income funds category showed an enormous growth of 117% in terms of size. As the central bank (SBP) kept the discount rate unchanged at 12% in its last monetary policy, the downward valuation adjustments were witnessed in T-bills and PIBs holdings. Thus, as far as return of income funds is concerned, this category earned an average annualized return of 10.2% during Feb-12, down by 0.4% over last month. During 8MFY12, the income funds also earned average return of 10.2% on annualized basis.

Money market funds continues to outshine the industry, up 10% MoM
Money market funds category constituting 42% of the total size of the open-end funds (38% of the entire industry) again outshined the industry and rose by 10% MoM in Feb-12 to reach at Rs138bn (USD1.52bn), against Rs125bn (USD1.37bn) in Jan-12. NBP Fullerton Asset Management (NAFA) launched NAFA Money Makret Fund during Feb-12. With such consistent pace, the money market funds’ cumulative size was up 78% during 8MFY12 (Jul-Feb12) which was the second highest return recorded within the industry during the period, following the income funds category.

Equity funds up 6% MoM, thanks to rallying local equities
After having another month of positive returns from equities (KSE100 index up 8% MoM in Feb-12), the equity funds category showed positive march in its funds size appreciating by 6% MoM to close at Rs49bn (USD538mn). However, despite the back-to-back improvement in equities over the last two months, the equity funds’ size still stands 4% down in 8MFY12 compared to the level observed in Jun-11, against the KSE100 index positive movement of 3% during the same period.
In the month of Feb-12, the KSE100 index appreciated by 8.5% MoM while showing a slight underperformance, equity funds category earned an average return of 7.2% MoM, with the highest return earned by the AKD-Opportunity Fund (AKDOPF), which secured a return of 14.6% MoM, beating not only the industry averages but also the KSE100 and KSE30 index returns of 8.5% and 6.6%, respectively.

Remarkably, during 8MFY12, the equity funds category posted an average return of 6.8% since Jun-11, outperforming the KSE100 index return of 3.1% and KSE30 index return of 2.8% for the same period. Amongst individual funds, ABLSF recorded the maximum return of 16.1%, followed by ASMF which secured a return of 12.0% during this period.
(InvestCap)

[Amin Khan]

Mutual funds down 8% MoM in Mar-12, to Rs330bn
An excerpt of our detailed mutual fund performance analysis report titled ‘Invest Guide’, for the month of Mar-12 as well as 9MFY12 period.

Mutual funds industry down 8% MoM to Rs330bn (USD3.63bn)
After commencing CY12 on a rising note (growing in Jan-12 by 19% MoM and in Feb-12 by 5% MoM), the size of the local mutual funds industry recorded a decline of 8% MoM during Mar-12, settling at Rs330bn (USD3.63bn), down from Rs360bn (USD3.96bn) a month ago. Major fall causing overall industry decline was witnessed in the size of income funds and money market funds categories, which went down 16% MoM and 13% MoM, respectively.
Based on asset manager’s AUM (Assets Under management) during Mar-12, major decline/redemption was witnessed in the size of ABL AMC’s AUM, which fell by an absolute amount of Rs18.1bn (USD199mn) down 28.3% MoM, followed by Askari Investment Management’s AUM descending by Rs7.4bn (USD81mn), down 35.5%

MoM, and UBL Fund Managers’ AUM slipping by Rs3.4bn (USD37mn), down 7% MoM in Mar-12.
Out of the industry’s total decline of Rs29.9bn (USD330mn) during Mar-12, Rs28.9bn (USD318mn), or 97% of the industry decline, was contributed by these three AMCs during Mar-12. Excluding these, industry size showed a marginal decline of ~Rs980mn, or 0.3% MoM in Mar-12. The decline in industry size was not unusual and believed to be consistent with the ‘quarter-end factor’ when banks/financial institutions pullout/redeem their investments to shape-up their balance sheet and returns before the period end (see graph alongside).
As far as category-wise performance is concerned, the size of the open-end funds rose 15% QoQ during 3QFY12/1QCY12 (Jan-Mar12) reaching Rs307bn (USD3.38bn) while that of the closed-end funds stood at Rs23bn (USD253mn), showing an appreciation of 17% QoQ. During 9MFY12 (Jul-Mar12), the industry now stood with a huge cumulative growth of 32%.

Income fund size falls 16% MoM, return improves 120bps in Mar-12
The size of the income funds, which showed a tremendous rising trend during last 8MFY12 (till Feb-12), declined by 16% MoM to reach Rs71bn (USD783mn). Major declined was witnessed in the size of ABL-GSF, which went down 38% MoM and contributed 91% to the total decline in this funds’ category during Mar-12. However, during 9MFY12 (Jul-Mar12), the size of the income funds category still stood with a massive appreciation of 82%.
As far as returns go, during Mar-12, the income funds category earned an average annualized return of 11.4%, which was up 120bps MoM. However, excluding NIOF's unusual return of 36.8% (highest return in the category for Mar-12), the income funds category earned adjusted return of 10.3%, in line with the last month's average returns. The income funds also earned annualized return of 10.2% on average during 3QFY12 while on a cumulative basis during 9MFY12, the category posted an average annualized return of 10.3%.

Money market funds down 13% MoM, up 14% during 3QFY12
In Mar-12, the money market funds declined by 13% MoM to settle at Rs120bn (USD1.32bn) as compared to Rs138bn (USD1.51bn), a month ago. Amongst funds, major redemption was witnessed in ASK-CF, ABL-CF and ULPF, which fell by 41%, 22% and 12% on MoM basis to reach at Rs11bn, Rs20bn and Rs26bn, respectively. However, during 3QFY12, the size of the money market funds’ category increased by 14% while during 9MFY12, the category still stood with a cumulative jump of 55% from Jun-11 figure of Rs77bn (USD895mn).
In line with the income funds' return, the money market funds posted average return of 10.7% on an annualized basis, though showing a marginal improvement of 60bps over last month's return of 10.1%. Amongst individual funds, highest return was earned by AKD-CF (13.1%) beating the average category returns by 240bps in Mar-12. During 9MFY12, the money market funds’ category earned an average annualized return of 11.5% with the highest return earned by ASK-CF (12.0%), outperforming category’s average return by 50bps.

Equity funds’ size stagnant, despite continued rally in equities in Mar-12
Despite the 6.9% upward movement in the KSE100 index during Mar-12, the size of the equity funds’ category slightly went down by 1% MoM to Rs49bn (USD540mn) while category’s accumulated decline stood at 5% during 9MFY12. However, during 3QFY12, the fund size of equity funds’ category appreciated by a decent 12% QoQ.

Against benchmark KSE100 and KSE30 index returns of 6.9% and 1.8%, respectively during Mar-12, equity funds earned an average return of 5.6% during the month, showing underperformance against the KSE100 of 1.3% while an outperformance against KSE30 index by a heavy margin of 3.8%. Amongst funds during the month, highest returns were earned by the AKD Opportunity Fund (AKDOPF) of 16.0%, which was its second consecutive month with outperformance against the index as well as peer performance by a heavy margin.
(InvestCap)

[Amin Khan]

Mutual funds back on track, up 14% in Apr-12
Excerpt of our detailed mutual fund performance analysis report titled 'Invest Guide', for the month of Apr-12 as well as 10MFY12 period.

Mutual funds elevated 14% MoM to reach at Rs377bn (USD4.18bn)
After showing reduction of 9% MoM in fund size during Mar-12 due to quarter end phenomenon, the industry recovered well in Apr-12 with solid growth of 14% MoM, reaching at Rs377bn (USD4.18bn). As compared to Rs30bn redemption witnessed in Mar-12, an increase of Rs46bn was witnessed in mutual fund industry during Apr-12. Major growth was witnessed in income and money market fund categories, registering a growth of 24% MoM and 22% MoM as compared to previous month decline of 16% MoM and 13% MoM respectively. Contrary to the high volumes of redemption witnessed last month, fund size of ABL-GSF and ASK-CF appended by Rs15.4bn and Rs9.3bn respectively, showing huge amount of reinvestment in the funds after quarter-end factor. An aerial view of AMC reveals that the major growth was witnessed in the size of the Askari Investment Management Ltd which grew by 70%MoM to stand at Rs23bn followed by ABL Assets Management which increased by 43%MoM to reach at Rs65bn. On the other hand, major decline was witnessed in the AUM of KASB Funds which fell by 19%MoM to reach at Rs2.3bn, the reason for decline was maturity of KASB Capital Protected Gold Fund (managed by KASB Funds) which matured on Mar-12 after completing its tenure. As far as category wise performance is concerned, the size of the open-ended funds increased by 15%MoM to reach at Rs354bn while that of closed ended funds stood at ~Rs24bn showing an appreciation of 14% MoM. Moreover, during FY12TD(Jul-Apr12), the industry has accumulated a decent growth of 51%.

Income fund size up 24% MoM, returns remained under pressure
The size of the income funds which posted the decline of 16% MoM (total size of Rs71bn) in Mar-12, witnessed a solid recovery posting growth of 24% MoM to reach at Rs87bn. Major growth was witnessed in the size of ABL-GSF, which was up by 79% MoM and contributed 92% in the MoM growth of income funds category and 33% in overall appreciation of mutual fund industry. While on the accumulated basis, the size of the income funds category appreciated by solid 125% during FYTD (Jul-Apr12). As far as returns of the income funds category is concerned during the month of Apr-12, provisioning of non-performing investments have shrunk the annualized returns by 670bpsMoM to 4.7%. However, if we exclude DIF, which posted negative annualized return of 57.6% MoM in income fund category, the category has posted the annualized return of 7.3%MoM during Apr-12 but still under performed the fixed income segment of the capital market. However during FY12TD (Jul-Apr12) the income fund category earned annualized return of 9.6%.

Money market funds appreciated 22% MoM, up 90% during 10MFY12
During Apr-12, the money market funds was also manage to perform well on the back of 22% MoM appreciation in the fund size of the category which reached at Rs147bn, as compared to 13%MoM decline was witnessed during Mar-12. However on FYTD basis (Jul-Apr12), the category appreciated by 90%. The major growth was witnessed in the fund sizes of ASK-CF, PCF and ULPF which appreciated by 86%, 81% and 23% on MoM basis to reach at Rs20bn, Rs4.3bn and Rs32bn respectively. The money market funds' return remained stable during the month of Apr-12 and posted average return of 10.8% on annualized basis, as compared to previous month return of 10.7%. During FY12TD (Jul-Apr12) the money market funds category earned annualized return of 11.4% whereas the highest return was posted by ASK-CF of 11.92% outperforming the category by 52bps.

Equity funds’ avg. returns improved, outperformed the benchmarks
During Apr-12, the fund size of equity funds category appreciated by 4% MoM to reach at Rs51bn compared to Rs49bn last month, while the size of the equity funds category posted the decline of 2% FY12TD (Jul-Apr12. The equity funds category outperformed the stock market posting the return of 2% MoM in Apr-12 as compared to KSE -100 and KSE-30 index returns of 1.7% and 1.1% respectively. Highest return was earned by AKDOPF posting 6.7% during Apr-12 while also outperforming the KSE100 index return by heavy margin of 5%. As a result of highest returns in equity funds category during last 3 consecutive months, AKDOPF has been ranked No.1 slot return-wise in equity funds category with return of 32.1% FY12TD (Jul-Apr12) as compared to category average return of 14.5% and KSE100 and KSE30 index return of 12.0% and 5.8% respectively during the same period.
(InvestCap)