Islamic Money Market: NBP Islamic fund outperforms its peers

November 14, 2019 (MLN): Shariah Compliant Money Market Funds remained competitive in terms of stable riba-free returns, higher liquidity and a better avenue for short term investment in October. All five funds surpassed the annual benchmark set by Mutual Funds Association Pakistan (MUFAP).

To assess the performance of these funds, the benchmark is set which is the average of three months deposit rate of three (3) AA rated banks or Islamic windows of conventional banks as selected by MUFAP. The banks are Sindh Bank, Faysal Bank and Bank of Punjab and the annual average benchmark as per their deposit rates stood at 5.81%.

According to the data gathered by Mettis Global, all funds delivered the profitable returns during the stated period which were; NBP Islamic Money Market Fund (NBPIMMF), Meezan Rozana Amdani Fund (MEEZANRAF), Al-Ameen Islamic Cash Fund (AICF), HBL Islamic Money Market Fund (HBLIMMF) and Meezan Cash Fund (MEEZANCF).

This time, again, NBP Islamic Money Market Fund stood first amongst all others by giving 12.62% total annual returns as its NAV hopped from Rs. 10.33 to Rs. 10.44 per share.

Fund's risk profile emanates from its portfolio allocation towards very low-risk avenues. The fund has had its fund’s stability rated at ‘AA (f)’ by Pakistan Credit Rating Agency (PACRA), as of December 2018. Most of the assets of the fund are invested in cash and some are allocated to banks and DFIs.

Following NBP closely was Meezan Rozana Amdani Fund (MEEZANRAF) with annual returns standing at 12.59%. MEEZANRAF’s NAV stood at Rs.50 per share which remained the same when compared to previous month’s NAV.

MEEZANRAF has a more diversified portfolio in which investments are allocated to banks & DFIs, term finance certificates (TFCs) in addition to cash.

Positioned at the third place amongst top performers was Al-Ameen Islamic Cash Fund (AICF) with total returns of 12.17% and its final NAV jumped to Rs.100.42 per share in October 2019. Almost all of the fund is invested in liquid avenues i.e. cash.

Regarding payouts, HBL Islamic Money Market Fund (HBLIMMF) gave the largest total payout of Rs.1 per unit on October 2019, whereas Al-Ameen Islamic Cash Fund (AICF) paid Rs.0.49 per unit on October 14, 2019.

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