The local mutual funds industry has increased by three percent during the third quarter (January-March) of FY11 to close at Rs 229 billion. However, the mutual fund industry has shown a decline of two percent on month-on-month basis in March 2011. On the other hand, the industry has accumulated a decent growth of 15 percent during the nine months period of FY11 (July-March).
"As far as category-wise performance is concerned, the size of the open-ended funds increased by 4 percent in the third quarter of FY11 reaching Rs 203 billion while that of the closed-end fund stood at Rs 26 billion, showing a decline of 4 percent during this period," Mazhar A Sabir, an analyst at Invest Capital and Securities said, adding that "Comparing growth of the local mutual funds industry on quarter-on-quarter basis, the industry size remained stagnant in the first quarter of FY11 (July-September 2010) and increased by only 2 percent while showing a growth of 10 percent in the second quarter FY11 (October-December 2010) mainly on the back of bourses upward movement, he added.
The industry although showing a lacklustre performance again in the third quarter of FY11, increased by 3 percent, he said. In March 2011, the Income Funds category earned annualised return of 21.0 percent, better than the previous month's return of 18.7 percent backed by the upward revision in TFC pricing during the month. The income funds earned 12.6 percent average annualised return in the third quarter of FY11 and on cumulative basis, during the nine months of FY11, the category posted average annualised return of 11.2 percent. The size of the income funds, which stood at Rs 38 billion in March 2011, continued its negative trend and declined by 11.0 percent on month-on-month basis. During the third quarter of FY11, the income funds, which showed a decline of 10 percent, were ignored by investors amid volatility in the TFCs pricing methodology adopted by the industry.
The Money Market Funds category surpassed the milestone of Rs 50 billion in December 2010 and marked itself as a highest funds managing category. During the third quarter of FY11, the money market funds showed an appreciation of 25 percent to reach at Rs 62 billion. However, in March 2011, the category is showing a decline of 7 percent on month-on-month basis. The money market funds category earned average annualised return of 12.1 percent, which is slightly lower than the last month's return of 12.7 percent. During the third quarter of FY11, the money market funds category posted average annualised return of 12.2 percent.
The benchmark KSE-100 index lost 1.8 percent in the third quarter of FY11, while the equity funds' category posted an average return of 5 percent, outperforming the benchmark. Simultaneously, in March 2011, the category earned average return of 7.7 percent as against the KSE-100 index return of 4.6 percent. During the month, most of the equity funds were observed to have outperformed the benchmark KSE-100 index return.