RETAIL FUNDS | Cesar Tordesillas, India

Pakistani mutual funds up 15%

Public money under management of Mutual Funds rose 15 per cent to Rs287 billion in July to December, 2011.


The impetus to growth in the first half of the year was provided by the `Open-end funds`, which expanded by 19 per cent over the same time previous year to touch Rs267 billion or $3.05billion.

The closed-end funds showed a significant decline of 21 per cent YoY to settle at Rs20billion or $0.23 billion.

In December, however, unit holders went for redemptions, shrinking the size of the Fund by 5 per cent, over the same month last year.

`In December 2011, the local mutual funds saw redemption of 5 per cent MoM, with major decline of 12pc witnessed in the money market funds` category that clocked in at Rs105bn,` according to analyst Mazhar A Sabir at brokerage InvestCap in a report released on Thursday.The reason for redemption in December appeared to be the `account book closing`, as banks and other financial institutions usually pull out funds from their investments, especially from their shortterm fixed income instruments, to keep their balance sheets in decent shape. On quarter-on-quarter basis, during fourth quarter CY11, the size of mutual funds grew by 16pc, with a grand aggregate addition of 29pc to the funds, YoY during 2011.

Exceptionally healthy growth of 41 per cent was witnessed in fixed Income funds in 1HFY12, Jul-Dec11, to reach at Rs55billion or $0.63 billion, with slight drop of less than 1pc on MoM basis.

However, on a cumulative basis, the size of the category appreciated by a healthy 30pc YoY in CY11, primarily owing to additions of four new income funds.The Money Market Funds, which experienced an incredible 100 per cent growth in CY11, however, ran down by 12 per cent in December over the same month earlier year to finish at Rs105 billion.

The December-end book closing by companies was again thought to be the major reason for decline in the fund sizes in the category during the month.

In the six months FY12, money market funds grew by 36%.

The laggards among various categories of mutual funds were again the equity funds that declined 11 per cent, understandably due to the slump in stock prices.

Yet equity funds seemed to have underperformed against the KSE-100 index comparatively slower negative growth of 5.5%.

In December 2011, the equity funds declined by 4 % and funds under management in the category eroded 15 per cent in the six months of current financial year.

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