Income Mutual Funds - Rolling with the punches!

March 20, 2020 (MLN): The Mutual Funds industry was exposed to a host of adversities during February 2020, on account of several economic as well as global factors. The outbreak of Corona pandemic has been held responsible, and rightly so, for taking away the confidence of several investors and thus creating an unwarranted selling spree.

Income Funds

Despite the faltering conditions of the economy during the month, and unlike the performance shown by Equity Funds, the Income Mutual Funds managed to stand their ground as most of them generated returns in the positive domain.

While the returns of all the funds were positive, the performance of each would be measured against the average return of 6-month Kibor rates for the month, the calculation of which equates to 13.48%. The graph below shows that only 3 out of the total 30 funds managed to cross the benchmark, with the rest of the funds missing out by insubstantial margins.

The top-performing funds for the month were Laskon Income Fund, HBL Income Fund, and NBP Income Opportunity Fund, as they generated returns of 16.61%, 14.52%, and 13.6% respectively.

On the contrary, the returns offered First Habib Income Fund and Atlas Income Fund, even though not in line with the yardstick, were still favorable.

Shariah Compliant Income Funds

All Shariah Compliant Income Funds stood firm to its stance of delivering an attractive rate of returns in February 2020, by successfully beating their benchmark rate by a substantial margin compared to its counterparts.

The benchmark for these funds in February was set at 6.82% after taking the average of 6-month deposit rates of three ‘A’ rated Islamic Banks, selected by the Mutual Funds Association of Pakistan (MUFAP).

After successfully outshining this point of reference (6.82%), all the shariah-compliant income funds recorded total returns within the range of 8.33% – 13.21% for the month mentioned above.

As per the data aligned by Mettis Global, the top three best performing funds during the month were Atlas Islamic Income Fund, ABL Islamic Income Fund, and Alfalah GHP Islamic Income Fund.

Atlas Islamic Income Fund posted an annualized return of 13.21% against the benchmark return of 6.82%. This was followed by ABL Islamic Income Fund and Alfalah GHP Islamic Income Fund as they offered an annualized return of 3.16% and 3.10% respectively to their investors.

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