HBL-Islamic Money Market Fund posts growth in Sep

By Riffat Mughal

KARACHI: Islamic Money Market Funds and Islamic Cash Funds showed slack performance during the month of September, 2011 as the net assets of the category decreased by 9.83 percent Month-on-Month (MoM) to Rs 6,892.176 million as at September 30, 2011.

Despite the sluggish performance of the money market funds in general, HBL Islamic Money Market Fund (HBL-IMMF) net assets grew by 1.35 percent.

HBL-IMMF net assets reached Rs 410.617 million during the month of September, 2011 as compared to Rs 405.161 million in the previous month. During the month, the fund has registered annualized return of 10.42 percent against the benchmark of 7.05 percent.

Net Asset Value (NAV) as of September 30, 2011 was recorded at Rs 102.5724 as compared to Rs 101.7017 as of August 31, 2011. Since it is an income fund which regularly pays dividends, the stability and low movement in NAV is logical.

Due to limited investment alternatives in Islamic money market fund, the fund resorted to placement with banks and followed the same investment strategy. The fund placed its investment funds at high yielding term deposit receipts. Asset Allocation in cash was shuffled during the month from 0.23 percent to 0.56 percent in September, 2011. The fund has allocated 96.90 percent in Term Deposit Receipts and 2.55 percent in other securities including receivables.

During the month, money market remained highly illiquid. To normalize the liquidity situation, State Bank conducted Open Market Operations (OMOs) and injected around Rs 1,024 billion at weighted average yield of 13.21 percent while it also mopped up around Rs 32 billion through outright sale of 21 day paper at a yield of 13.46 percent.

However, KIBOR rates depicted downward trend due to the anticipation of a cut in the discount rate in the latest monetary policy. The six month KIBOR rate fell by 13 bps to close at 13.25 percent.


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