KARACHI, Nov 22: The Employees Old-Age Benefits Institution (EOBI) has achieved a fabulous rate of return of over 30 per cent from its investment in equities, which the Institution said, was its first ever investment in the country’s capital market.

Sources said that on realizing around Rs100 million out of total equity investment, the EOBI has attained a total rate of return of around 30.07 per cent. Out of this 12.19 per cent came through dividend and 17.88 per cent out of capital gain.

It is estimated that the institution has already made a gain (profit) of around Rs93 million out of unrealized capital gain and expected dividends. This constitutes around 45 per cent of unrealized capital gain and dividends, the sources said.

The total investment income for first quarter was Rs2,829 million as against Rs2,091 million showing an increase of Rs738 million which was 35.03 per cent more than the income of the same period last year.

In the past the EOBI had been entirely investing in government debt (securities), but gradual cut in interest rates of National Saving Schemes (NSS) and PIBs compelled the new management to look for new avenues of investment.

By diversifying source of investment the institute is trying to mitigate risk as well as bring about improvement in the rate of risk return.

As a result of this policy the overall rate of return in all categories of investment portfolios which also includes TFCs, stocks and government debt (securities) made impressive growth of 33.44 per cent during first quarter of current fiscal.

The sources said that presently the institution is holding around 2.5 per cent of its investment of equal ratio (1.25) in TFCs and stocks. Both these avenues of investment were tapped by the EOBI under its newly tailored investment policy, which began only a couple of weeks before the start of new FY 2002-2003.

In order to mitigate risk in equity investment the institution, besides taking a consultancy role from a number of brokerage houses, has also established an in-house investment division looked after by highly qualified and professional as its director general.

Under firmly laid down investment parameters the EOBI investment in equities will be on long term basis and it will be in those stocks which have high yield and excellent track record of giving dividends.

Consequently, equity investment will be in blue chips of those companies who have strong fundamentals. Each package of investment proposed by the institution’s division is approved by its board.

The EOBI chairman Shafi Malik told Dawn that institutional changes are being made to enhance the efficiency of the staff and workers. He said that it is highly encouraging that entire year’s target of 30 per cent return on investments have been achieved in a single quarter.