The size of the local mutual funds industry recorded a decline of eight percent on month-on-month basis during March 2012, settling at Rs 330 billion (dollars 3.63 billion), down from Rs 360 billion (dollars 3.96 billion) a month ago, analysts said.
After commencing calendar year 2012, the mutual funds industry increased by 19 percent in January and five percent in February. "The major fall causing overall industry decline was witnessed in the size of income funds and money market funds categories, which went down 16 percent and 13 percent on month-on-month basis, respectively", Mazhar A Sabir, an analyst at InvstCap said.
Based on asset manager's AUM (Assets Under management) during March 2012, major decline/redemption was witnessed in the size of ABL AMC's AUM, which fell by an absolute amount of Rs 18.1 billion (dollars 199 million) down 28.3 percent on month-on-month basis, followed by Askari Investment Management's AUM descending by Rs 7.4 billion (dollars 81 million), down 35.5 percent, and UBL Fund Managers' AUM slipping by Rs 3.4 billion (dollars 37 million), down seven percent on month-on-month basis in March 2012, he added.
Out of the industry's total decline of Rs 29.9 billion (dollars 330 million) during March 2012, Rs 28.9 billion (dollars 318 million), or 97 percent of the industry decline, was contributed by these three AMCs during March 2012, he said. Excluding these, industry size showed a marginal decline of Rs 980 million, or 0.3 percent in March 2012.
The decline in industry size was not unusual and believed to be consistent with the 'quarter-end factor' when banks/financial institutions pullout/redeem their investments to shape-up their balance sheet and returns before the period end.
As far as category-wise performance is concerned, the size of the open-end funds rose 15 percent on quarter-on-quarter basis during January-March 2012 reaching Rs 307 billion (dollars 3.38 billion) while that of the closed-end funds stood at Rs 23 billion (dollars 253 million), showing an appreciation of 17 percent on quarter-on-quarter basis.
During the nine months of FY12 (July-March 2012), the industry now stood with a huge cumulative growth of 32 percent, he said.
Income fund size falls 16 percent on month-on-month basis, return improves 120bps in March 2012. The size of the income funds, which showed a tremendous rising trend during last eight months of FY12 (till February 2012) declined by 16 percent on month-on-month basis to reach Rs 71 billion (dollars 783 million).
"Major declined was witnessed in the size of ABL-GSF, which went down 38 percent on month-on-month basis and contributed 91 percent to the total decline in this funds' category during March 2012", he said. However, during nine months of FY12 (July-March 2012), the size of the income funds category still stood with a massive appreciation of 82 percent, he added.
As far as returns go, during March 2012, the income funds category earned an average annualised return of 11.4 percent, which was up 120bps on month-on-month basis. However, excluding NIOF's unusual return of 36.8 percent (highest return in the category for March 2012), the income funds category earned adjusted return of 10.3 percent, in line with the last month's average returns. The income funds also earned annualised return of 10.2 percent on average during the third quarter of FY12, while on a cumulative basis during nine months of FY12, the category posted an average annualised return of 10.3 percent.
In March 2012, the money market funds declined by 13 percent on month-on-month basis to settle at Rs 120 billion (dollars 1.32 billion) as compared to Rs 138 billion (dollars 1.51 billion), a month ago. Amongst funds, major redemption was witnessed in ASK-CF, ABL-CF and ULPF, which fell by 41 percent, 22 percent and 12 percent on month-on-month basis to reach at Rs 11 billion, Rs 20 billion and Rs 26 billion, respectively. However, during the third quarter of FY12, the size of the money market funds' category increased by 14 percent while during nine month of FY12, the category still stood with a cumulative jump of 55 percent from June 2011 figure of Rs 77 billion (dollars 895 million).
In line with the income funds' return, the money market funds posted average return of 10.7 percent on an annualised basis, though showing a marginal improvement of 60bps over last month's return of 10.1 percent. Amongst individual funds, highest return was earned by AKD-CF (13.1 percent) beating the average category returns by 240bps in March 2012. During the nine months of FY12, the money market funds' category earned an average annualised return of 11.5 percent with the highest return earned by ASK-CF (12.0 percent), outperforming category's average return by 50bps.
Despite the 6.9 percent upward movement in the KSE100 index during March 2012, the size of the equity funds' category slightly went down by one percent on month-on-month basis to Rs 49 billion (dollars 540 million) while category's accumulated decline stood at five percent during nine months of FY12. However, during third quarter of FY12, the fund size of equity funds' category appreciated by a decent 12 percent on quarter-on-quarter basis.
Against benchmark KSE-100 and KSE-30 index returns of 6.9 percent and 1.8 percent, respectively during March 2012, equity funds earned an average return of 5.6 percent during the month, showing underperformance against the KSE-100 of 1.3 percent while an outperformance against KSE-30 index by a heavy margin of 3.8 percent. Amongst funds during the month, highest returns were earned by the AKD Opportunity Fund (AKDOPF) of 16.0 percent, which was its second consecutive month with outperformance against the index as well as peer performance by a heavy margin, he added.
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