Islamic Money Market Funds August, 2011 Review
KARACHI: Islamic Money Market Funds and Islamic Cash Funds performed
impressively during the month of August, 2011 as the net assets of the
category increased by 9.15 percent Month-on-Month (MoM) to Rs 7,643.277
million as at August 31, 2011 from Rs 7,002.683 million as at July,
2011.
This particular category includes three Islamic Money Market and
Islamic Cash Funds in the market including Meezan Cash Fund, ABL Islamic
Cash Fund and HBL Islamic Money Market Fund.
The weighted average annualized return of all the three funds
remained 11.63 percent for August, 2011 which improved from 11.62
percent reported in July, 2011.
The introduction of short term Sukuk like KAPCO and HUBCO provided an
opportunity for diversification of investments and the industry would
continue to explore other short term lucrative investment opportunities
in order to bolster returns.
Meezan Cash Fund
Meezan Cash Fund (MCF) net assets surged by 12.16 percent in the
month of August, 2011 as it reached Rs 6,513 million as compared to Rs
5,807 million in the previous month. MCF has provided an annualized
return of 11.8 percent for the month of August, 2011 as against its
benchmark which provided return of 8.3 percent during the same period
under review.
Net Asset Value (NAV) per unit as of August 31, 2011 was recorded at
Rs 50.12 as compared to Rs 50.49 as of July 31, 2011. Since it is an
income fund which regularly pays dividends, the stability and low
movement in NAV is understandable.
ABL Islamic Cash Fund
ABL Islamic Cash Fund's (ABL-ICF) net assets declined by 8.66 percent
to Rs 725.116 million as at August 31, 2011, as compared to Rs 793.859
million as at July 31, 2011. ABL-ICF has improved its annualized return
of 11.27 percent for the month of August, 2011 as against its benchmark
which provided return of 2.80 percent during the same period. Despite
significant volatility in money market yields, ABL-ICF was able to
provide competitive returns.
ABL-ICF's Net Asset Value (NAV) as of August 31, 2011 was recorded at Rs 10.1997 as compared to Rs 10.109 as of July 31, 2011.
HBL Islamic Money Market Fund
HBL Islamic Money Market Fund (HBL-IMMF) net assets slightly improved
in the month of August, 2011, it went up by meager 0.83 percent to Rs
405.161 million as compared to Rs 401.824 million in the previous month.
During the month, the fund has registered annualized return of 9.58
percent against the benchmark of 8.38 percent.
Net Asset Value (NAV) as of August 31, 2011 was recorded at Rs
101.7017 as compared to Rs 100.881 as of July 31, 2011 as it is an
income fund which regularly pays dividends, the stability and low
movement in NAV is logical.
Money Market Overview
Among Islamic Money Market and Islamic Cash Funds, MCF performed well
as it showed 12.16 percent growth in its net assets which played an
important role in improving industry's Money Market Funds growth of 9.15
percent in the month of August, 2011. During the month, money market
remained highly illiquid. CPI inflation in the month of August improved
as it recorded at 11.56 percent which is much better and against the
market expectation of 13.20 percent.
Market reacted positively to the 50 bps rate cut in last monetary
policy, while in upcoming monetary policy; the market is expecting that
the rates would further be cut down by 50 to 100 basis points to boost
the economic growth. On the forex front, rupee depreciated against
dollar and traded at Rs 88.7 per dollar today in the interbank market.
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