Islamic Mutual Funds net assets surge by 17.57pct during Q2FY12

  By Riffat Mughal

Pakistan’s Islamic mutual funds performed better during the second quarter of financial year (Q2FY12) as net assets of all Islamic funds increased by 17.57 percent to Rs 47.812 billion as against Rs 40.67 billion during Q1FY12.

Net assets of Islamic Open end funds went up by 18.36 percent and reached Rs 45.405 billion during Q2FY12 as compared with Rs 38.361 billion during last quarter. Islamic pension funds also surged up by 13.43 percent to Rs 1.079 billion; however, Islamic closed end funds declined by 1.97 percent to Rs 1.327 billion.

During the period under review, the equity markets remained dull with thin volumes and concentrated activity was seen in selected scripts due to absence of positive triggers. Money market funds also remained in tight situation due to ease in monetary stance by the State Bank of Pakistan. Uncertain political conditions of the country also impacted both the money market and equity markets.

Islamic Asset Allocation Fund

Islamic Asset Allocation Fund net assets in open end funds category declined during the quarter by 5.04 percent and stood at Rs1.138 billion. However, net assets of closed end funds went down by 1.97 percent to Rs 1.327billion. Sales of the fund also decreased by 22.38 percent to Rs 0.021 billion and redemption surged by 6.68 percent, reaching Rs 0.034 billion respectively. While, the return of open end funds stood at a negative 2.62 percent.

Islamic Balanced Fund

Net assets of open end Islamic Balanced Fund decreased by 4.10 percent to Rs 0.701 billion during Q2FY12. The sales of this category of fund were recorded at Rs 0.006 billion against the redemption of Rs 0.023 billion. The return on open end funds declined and was negative 1.71 percent.

Islamic Capital Protected Fund

The net assets of Islamic Capital Protected Fund were recorded at Rs 0.407 billion during the second quarter of financial year. No sales and no redemption of this category of fund occurred during the quarter; however, in the Q1FY12 its sales stood at Rs 0.396 billion. The quarterly return of open end funds was recorded at 0.1 percent.

Islamic Equity Fund

Islamic Equity Fund net assets in open end funds category were recorded at Rs 6.605 billion, a decline of 4.45 percent during the quarter. The sales of the equity fund fell by 8.91 percent and reached Rs 0.324 billion while redemption was recorded at Rs 0.172 billion. The quarterly return of open end and closed end equity funds were recorded at -5.71 percent.

Islamic Income Fund

During the period, the net assets of Islamic Income Fund increased by 29.73 percent to Rs 28.825 billion. The sales of this category of fund surged by outstanding 210.05 percent and were recorded at Rs 10.402 billion against the redemption of Rs 4.098 billion. The return on open end Islamic Income funds was clocked at 10.85 percent.

Islamic Money Market Fund

Islamic Money Market Fund net assets of open end fund went up by 12.12 percent and stood at Rs 7.727 billion. The sales of this category of fund were recorded at Rs 2.536 billion against the redemption of Rs 1.872 billion. The yearly return on open end funds stood at 11.15 percent during the period under review.

Future Outlook

Ongoing corporate result season would bring positive momentum in equity market. After relaxation on Capital Gains Tax (CGT), volumes are expected to increase in the market. Among individual sectors, oil and cement sectors have strong fundamentals, while fertilizer sector will remain under pressure unless swift resolution of gas crisis happens. In the money market funds, with declining banking spreads, the competition will be tight and high yielding investment opportunities will be hard to find if the central bank keep its policy rate at the current level in next announcement.

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