The Karachi Stock Exchange (KSE) would see the largest listing of closed-end unit trust scheme as Pakistan Strategic Allocation Fund (PSAF) is planning to raise Rs 3 billion through banks and general public by May.
According to sources close to the capital market, the PSAF would be managed by Arif Habib Investments, offering the first fund in the country based on the expertise of professional fund managers as well as quantitative model.
The total size of the fund would be Rs 3 billion. Of this, Rs 2.25 billion is expected to be raised from selling units to banks and other investment companies while Rs 750 million would be raised through public offer.
Arif Habib Investments is already managing five funds. These are Pakistan Stock Market Fund, an open-end equities instrument worth Rs 1.56 billion; Pakistan Income Fund, an open-end money market valuing Rs 2.94 billion; Metro-Bank Pak Sovereign Fund, open-end government securities Rs 500 million; Pakistan Premier Fund, a closed-end equities of Rs 1.1 billion; and Pakistan Capital Market Fund launched in January worth Rs 1.5 billion.
Sources said that the 'Asset Basket Selection' for PSAF would be based on fundamentals, ie return on equity of individual companies, future earning forecasts, market positioning of company, sector fundamental, economic numbers, including inflation, interest rate forecast etc.
The PSAF would be based on fundamentals and would generally end up buying equities when their prices in the market fall below their estimated 'Fair Value' and selling when the prices are higher than their system assigned 'Fair value'.
The PSAF by its nature will gradually pull itself out of the market when there is a speculative price run-up. It will gradually increase its equity allocation when market prices offer value.
Therefore, the fund will offer consistent equity returns of best performing companies over long run.