National Investment Trust

Pakistans premier open-ended mutual fund, National Investment Trust (NIT) has once again delivered excellent news to investors. The asset management behemoth announced its half yearly results yesterday posting healthy profits.
It seems the new management has overturned the fears of a slide into poor performance, imagined by market watchers. The state-run NIT had reported poor results after executive reshuffling in the democratic governments of the 90s. Consistent performance speaks of the strength of the institution, not seen very often in todays state owned enterprises.
The flagship Unit Trust Fund registered a phenomenal growth of 143 percent in net income. Heavily dominated by equity securities the NI(U)T saw dividend income increase by 30 percent gains while capital gains saw a marginal 8 percent increase over the same period last year.
Seen as a stability mechanism for the government, when it comes to capital markets, NIT has done just that while outpacing the growth in the benchmark KSE-100 by a whopping 53 percent in the State Enterprise Fund, since it was first launched with the purpose of injecting liquidity into the local bourse back in 2009. Whereas the dividend stream for the fund remained largely flat, net profit grew by a significant 90.6 percent compared to the corresponding period.
For those that prefer the relative security of debt instruments, NIT launched a government bond fund NIT GBF in 2009. Annualised returns since inception stand at 10.7 percent whereas the period under review saw an increase of 10.6 percent. Perhaps the affinity for government securities was too mouth watering for the fund managers to pass up.
It is worth noting that during the period under review NIT did not use borrowing from commercial banks to inflate its gains. The liquidity pumped into the company and its astute management seems to be a change in strategy from the top management of the company.
While retail investors have long been the mainstay for the asset manager, institutional investors seem to have been targeted in recent months. Armed with deep pockets, they allow fund managers to take greater risks in chasing greater returns.
But institutional investors are often seen as fair weather friends. Significant liquidity challenges can be posed to NIT asset managers if portfolio investors make strategic exits. Perhaps refocusing on retail investors will balance the risk and ensure the long-term stability of the organisation.

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National Investment Trust

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                       NI(U)T              NIT-SEF

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Rs. mn             1HY11   1HY10   Chg   1HY11  1HY10    Chg

Capital Gain         440     407    8%     479      -     NA

Dividend Income      911     702   30%     437    433     1%

Net Income          2762    1135  143%    2061   1081    91%

Earning per Unit    2.35    1.09  116%    7.04   5.12    38%

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