KARACHI: Assets under management of mutual fund industry galvanised by 51 per cent during the financial year 2012 to touch Rs379 billion. The growth was twice the 25 per cent witnessed in FY11 over the year before.
Income Funds received the largest investor savings to show a jump of 124 per cent over the previous year. It was followed by money market fund up 95 per cent; Islamic income fund 43 per cent and Islamic money market fund 22 per cent over the earlier year.
A report prepared by Mazhar A. Sabir at brokerage InvestCap showed that the performance during the first quarter financial year 2012 stood relatively depressed, evidencing a decline of 1.2 per cent during July-Sept 2011. However, the later three quarters of FY12 witnessed robust growth of average 15 per cent quarter-on-quarter (QoQ) of FY12.
However on monthly basis, the industry revealed a drop of three per cent in June 2012 to Rs379 billion, over the earlier month’s Rs390 billion.
During FY12, the fixed income funds category of open-ended funds registered an appreciation of a massive 124 per cent YoY to reach Rs87 billion and contributed 24 per cent to the total open-ended size of the industry as compared to 17 per cent contribution witnessed in FY11.
Money Market funds revealed consistency in growth at 95 per cent, about the same as the earlier two year’s growth at 100 per cent YoY.
With the induction of two new money market funds, the net assets of the category reached Rs150 billion in June 2012, as compared to the June 2011 size of Rs77 billion.
Money market funds, therefore, stood out as the largest category in the mutual funds industry. “The reason for the phenomenal growth in money market funds was the investor’s general preference for low risk better return product,” said the analyst.
However, due to redemption effect of year end, the category size decline by 7 per cent in June over the same month last year. During FY12, the money market funds category earned average return of 11.2 per cent YoY.
“Since the SBP has kept the discount rate at existing levels since October 2011, the money market funds managers are shifting their investment in six-month papers and getting better returns from their investments in treasury Bills,” the analyst said.
The Equity Funds category remained stagnant over the FY11 level of Rs252 billion. The benchmark KSE-100 index gained 10.4 per cent YoY from 12,496 points levels in Jun-11 to close at 13,801 points in Jun-12.
The equity funds category posted an average return of 13.5 per cent YoY, outperforming the KSE 100-index by 320bps over the year.
