KARACHI, Nov 7: While conceding that the Securities and Exchange Commission of Pakistan (SECP’s) Nov 5 directive on revaluation of debt securities of income funds was ‘unilateral’, a major Asset Management company (AMC), JS Investments said on Friday that for the unit holders in Funds under its management, JS Income Fund (JS IF) and JS Aggressive Income Fund (JS AIF), the step should prove to be an opportunity into buying fresh units at lower NAVs and held out an assurance that investors’ money stood fully protected.

A press release issued by the company on Friday stated that as per the directives of SECP’s circular NBFC/MR-CIR/897) dated Nov 5, issued to all AMCs, JS Investments Limited (JSIL) has revaluated its portfolio of debt securities of JS Income Fund (JS IF) and JS Aggressive Income Fund (JS AIF). The revaluation has resulted in a downward adjustment of approximately 3.7 per cent and 4.0 per cent in the Nets Asset Values (NAVs) of JS IF and JS AIF respectively. As per SECP’s circular the revaluations of debt securities at discounted rates will be effective till January 12, 2009.

Commenting on the impact of SECP’s directives Najam Ali, CEO of JSIL said: “SECP’s action, while unilateral, should be taken in light of severe liquidity pressure gripping the financial sector as well as the mutual fund industry. This is a temporary phenomenon and will reverse as soon as liquidity situation in the industry improves”. He said that investors in JS IF & JS AIF should be comforted by the knowledge that both funds are among “the most liquid income funds in the industry”.

The company CEO stated that JS IF’s investment portfolio consisted of over 70 per cent of cash investments. “Furthermore, we have invested in high investment grade Term Finance Certificates and their market value is far more than the forced discount presently incorporated in the NAV as a result of SECP’s directives”.

Mr Najam stated that there was no cause for concern and investors should remain assured of their investment. He looked at it as a favorable opportunity for investors to benefit from discounted NAV’s and make fresh investments as NAV appreciation going forward would be at a much higher yield as compared to the period July 1-November 4, 2008.

“JS IF and JS AIF posted tax-free annualised return of 13.30 per cent and 12.40 per cent respectively during the period July 1 to Nov 4.” Mr Najam said. JS IF is the one of the oldest Income Funds and has the highest 5 star rating (Normal and Long Term) awarded by Pakistan Credit Rating Agency (Pacra).

An interim payout of Rs 3.05 per unit for JS IF and an interim payout of Rs 2.75 per unit were announced by the management company in Q1 2008, the company stated.

Analysts commented that the announcement by the company should be able to assuage investors’ fears over the state of health of the Mutual Funds industry, following a month old suspension of issuance, redemption and valuation of unit of open-end equity funds and the directive earlier this week of the SECP for downward revision of NAVs of units of income funds.

The Mutual Fund Association of Pakistan (Mufap) had on Thursday expressed its ‘disagreement’ over the SECP’s unilateral move and threatened to temporarily suspend issuance, redemption and pricing of units in income funds, in protest against the Regulator’s move.