July 12, 2019 (MLN): Fiscal year 2019 rounded local investors in a tough spot by surrounding them with a dangerously shaking economy, deteriorating investment opportunities and a crumbling stock market on three sides, leaving them with money market as one of the very few safe bets.
While fortune favors the bold, it firmly turns its back on the unwise and this was ascertained when investors of the extremely risky equity market put their money in equity funds and observed a unanimously depressing performance.
Drawing a parallel to this, investors of money market funds emerged as the wise as no less than 11 money market funds exceeded the annual weighted benchmark rate (70% 3 month PKRV and 30% 3 month average deposit rates of 3 ‘AA’ rated schedule banks as selected by MUFAP) which gave out returns at 8.7% on average.
On a side note, the three ‘AA’ rated scheduled banks selected by the Mutual Funds Association of Pakistan (MUFAP) are Sindh Bank, Faysal Bank and Bank of Punjab. Their annual average deposit rate for FY19 came out at 6.17% whereas annual average PKRV was recorded at 9.79% on account of consistently rising monetary policy rates.
A performance chart put together by Mettis Global shows that while all the money market funds realized positive returns during the year, JS Cash Fund (JSCF)’s performance stood out as it aced amongst all other money market funds once again.
The fund gave an annual return of 9.42% as its adjusted Net Asset Value leapt from Rs.92.8 per share to Rs.101.6 per share.
The nine-year old JSCF carries an extremely low risk profile and has had its fund’s stability rated at ‘AA+’ by Pakistan Credit Rating Agency (PACRA), while VIS (formerly known as JCR – VIS) rated its management quality at ‘AM2’, as of December 2018.
The largest portion of JSCF’s portfolio consisted of cash investments throughout most of the year while the remaining portions were invested in Treasury Bills and commercial papers. The fund gave a payout of Rs.0.71 per unit on June 24, 2019.
Following JSCF closely is Alfalah GHP Money Market Fund (AGHPMMF) with annual returns standing at 9.15%. Its NAV stood at Rs.89.7 per share at the start of FY19 and has now risen to Rs.97.95 per share.
This open ended fund carried low risk profile as of December 2018 and invested the major portion of its total assets in cash investments and treasury bills while some of its portfolio also comprised of TFC’s and NBFC’s.
Up next is Alfalah GHP Cash Fund (AGHPCF) which gave annual returns of 9.06%. With a low risk profile, AGHPCF allotted most of its portfolio to cash investments and T-bills as well. Its NAV at the start of FY19 was Rs.457.6 per share and had reached Rs.499 per share by the end of it. The fund also paid out Rs.42.65 per unit on June 30, 2019.
Speaking of payouts, the Atlas Money Market Funds gave the largest total payout of Rs.69.55 per units last year, exceeding Alfalah GHP Cash Fund by only Rs.3 per unit as the latter gave out a total of Rs.66.01 per unit during the year.
All in all, the money market lived up to its name for being one of the safest and least risky place to park money in an economy suffering from a highly volatile stock market.
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