NIT: steady approach, solid returns

Equity investors in the country have had a great time over the past nine months, as equity valuations at local bourses rocketed to levels never before seen in history. Now as the KSE 100-index is sitting pretty above the 18,500 points-level and the General Elections approaching, many are opting to cash out and book gains.
This trend is obvious from the financial results released by the National Investment Trust (NIT). Its flagship equity fund, NI(U)T ended the 9MFY13 period with net assets worth Rs40.056 billion; compared to Rs41.487 billion, at the end of the same period in the previous fiscal.
The fact that the number of units issued for NI(U)T also fell during this period, from 1.37 million to 1.16 million, validates the assertion that investors have opted to cash out. The Fund meanwhile, did well; with net asset value per unit climbing to Rs34.47 from Rs30.27.
The fact that this fund is skewed towards blue-chip stocks, meant that NI(U)T underperformed the benchmark index, as over the past nine months, second and third tier stocks accounted for a higher proportion of gains at local bourses.
In recent times, NIT has implemented steps to attract more investors; opening up new outlets and also introducing redemption facilities through Summit Bank ATM cards. Now the fund managers have their work cut out to ensure readiness to avail opportunities that may emerge once General Elections are successfully concluded in the country.
The State Enterprise Fund was established to help arrest the free falling equity prices. In line with Governments instructions, NIT has now repaid Rs10.6 billion to the financiers of the SEF. Those redemptions took a toll on that funds income. However it still managed to grow net income by about 54 percent to Rs1.327 billion in 9MFY13, compared to 9MFY12.
The Equity Market Opportunity Fund was also introduced in the aftermath of the meltdown witnessed in 2008. The funds NAV improved by over 25 percent. Although this improvement pales in comparison to the KSE 100-index; the Funds performance versus the benchmark index since its inception is still impressive.
On the fixed income front, the Income Fund also fell short of the benchmark return of 10.06 percent, as it yielded 9.86 percent for investors during the period under review.
However, Government securities have been making all the buzz among investors; largely preferred over debt issued by private entities. And NITs Government Bond Fund was a stellar vehicle for such investors as it yielded a return of 10.3 percent; beating the benchmark return of 8.93 percent.
On the whole, the performance reported by each of the funds operating under the NIT umbrella reiterates the steady, sure-footed modus operandi of its fund managers.
With expansion plans afoot; now NITs management should be doubling their efforts to bring back many of those who have booked gains, so that NIT also has ample cash on hand to take fresh bets, as economic and political uncertainties unravel in coming weeks.

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NIT PERFORMANCE (9MFY13)

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                   NAV   Benchmark

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NI(U)T          28.76%      30.74%

NIT - SEF       21.22%      30.74%

NIT - EMOF      25.65%      30.74%

NIT - IF         9.86%      10.06%

NIT - GBF       10.30%       8.93%

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