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KARACHI: Funds managed collectively by all the mutual funds in the country touched Rs259 billion by the end of July. That represented growth of 3.6 per cent over the aggregate funds with the industry the previous month.
Over the last seven months of the current calendar year, the money market funds category witnessed significant rise of 81 per cent, followed by Islamic income funds up by 47 per cent, which together have spearheaded the overall industry growth.
For all of the last financial year, the money market funds had witnessed a spectacular rise of 141 per cent. Analysts with an eye on the funds said that the industry had witnessed growth of a substantial 12.5 per cent (CAGR) in the preceding five years (FY06-11) and it appeared to be gathering unit holders' confidence and funds.
Open-ended funds shot up by 4.3 per cent in July over the earlier month with the total funds in the category rising to Rs234 billion. Closed-end funds remained in negative territory, said the analysts, adding that the decline was, however, a meager 0.8 per cent over June to close at Rs25billion.
A report by Mazhar A Sabir, analyst at stock brokerage firm, InvestCap, stated that in the seven months (Jan-July) of the current calendar year, the mutual fund industry had witnessed growth of 16.1 per cent over the sum of Rs223 billion in the corresponding period of 2010.
The analysts contended that the growth of the industry was well supported by two categories: The money market and Islamic income funds. In July, the money market funds showed increase of 17 per cent over the earlier month to reach Rs90 billion, while the Islamic Funds' rose by 4 per cent to Rs22 billion.
On the other hand, the Income Funds, which had declined by 16 per cent in financial year 2011, witnessed appreciation of 3 per cent in the month of July, while the sector declined by 5.3 per cent in the seven months, settling at Rs40billion.
The income funds category posted average annualised return of 12.7 per cent in July, far better than the previous month’s return of 6.4 per cent amid upward price revision of the TFC/Sukuk.
"After exclusion of a typical return of 89.1 per cent return on fund “NAMCOIF”, the category is still managing to earn return of 9.0 per cent on annualised basis", said the analyst.
During seven months, the category produced return of 10.7 per cent per annum. The money market funds category earned average annualised return of 11.2 per cent in the same time with the July return at 12.2 per cent per annum, in line with the previous month's 12.2 per cent.
"The main reason", said the analysts," was the higher return earned by the category as the managers of money market funds were shifting their investments towards 6-month papers in anticipation of SBP stance towards loosening monetary cycle, which would be beneficial to the long dated papers.
The equity related funds categories mirrored the dull sentiments at the stock market. In July, the KSE-100 index receded by 2.5 per cent while the equity funds category showed a decline of 7.5 per cent to close at Rs48 billion.
During seven months of the current year, 3.4 per cent funds were pulled back from the sector. The equity funds category earned negative return of 0.6 per cent in July as against the benchmark KSE-100 index negative return of 2.5 per cent.
In the seven months of the ongoing year, the equity funds category earned return of 2.7 per cent as against the KSE-100 index return of 1.4 per cent and KSE-30 index negative return of minus 0.2 per cent.
