July 19, 2019 (MLN): A total of 5 shariah compliant money market funds currently operate in Pakistan out of which, 4 funds completed a full year by the end of June 30, 2019.
What’s more is that all of these funds not only gave progressive returns during the year, but they also managed to cross their benchmark return by noticeable margins.
The benchmark set by all these funds is the three months’ average deposit rate of three (3) AA rated Islamic Banks or Islamic windows of Conventional Banks as selected by Mutual Funds Association Pakistan (MUFAP).
The three banks selected by MUFAP are; Sindh Bank, Faysal Bank Limited and Bank of Punjab and the annual average benchmark as per their deposit rates has come out at 3.18%.
Mettis Global Private Limited’s performance chart shows how all the four Islamic money market funds recorded their annual returns within a range of 7.5% to 8.5%.
Topping the rest, Al Ameen Islamic Cash Fund gave out 8.4% returns as its net asset value (NAV) leapt from Rs.92.47 per share to Rs.100.24 per share in a year.
All of these funds’ portfolios mainly consists of cash investments through which they live up to the standard of a typical money market fund which carries low risk and low returns. However, low returns are better than losses which were right around the corner, had the investors taken an alternate route.
Meezan Cash Fund being an exception, has a more diversified portfolio in which investments are allocated to banks & DFIs and term finance certificates (TFC’s) in addition to cash.
Al Ameen’s investors also enjoyed higher dividend gains compared to investors of the remaining funds as they observed a gain of 12.44% over the year.
Their total payout for the year was Rs.13.09 per share which was also the highest amongst all. Moreover, the dividend yield chart shows that Al Ameen might just be the best option for future investments as well, given that their dividend yield stands tallest at 13.06%.
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