April 12, 2019 (MLN): With the stock market suddenly much more volatile and interest rates on the rise, investors are looking for a less risky place to stash their cash, and this makes money market mutual funds more attractive for the investors.
As the first quarter of the CY19 has ended, the performances of the money market mutual funds can be analyzed whether these funds outperformed the benchmark of 3-month T-Bills which had a cut-off of 10.3% on December 20,2018.
For the 1QCY19 JS Cash Fund has emerged as the best performing fund with an annualized return of 10.05% having NAV recorded at Rs102. Wistfully, the return was 28 basis points (bps) lower than the benchmark of 10.3%.
JS Cash Fund (JS CF) is an open-end ‘Money Market Scheme’ that mainly invests in low risk short-term fixed income instruments including money market instruments to provide a regular return to investors.
The portfolio of the JS cash Funds in January and March FY19, consist of 97.7% and 80.2% of cash respectively, whereas in the month of February, the portfolio consist of 97.2% of TBills.
After JS cash Fund, Alfalah GHP Money Market Fund and the NAFA Money Market Fund, both managed to qualify to be in the list of the top-five best performing funds during the outgoing quarter, with an annualized return of 9.8% and 9.67% respectively. The NAV of these funds was recorded at Rs 523.2 and Rs 9.86 respectively.
Similarly, Askari Sovereign Cash fund and Atlas Money Market Fund managed to secure fourth and fifth position in the list, offered an annualized return of 9.65% and 9.57%, displaying 66 and 74 bps lower returns than the T-Bills.
On the other hand, Pakistan Cash Management Fund offered the lowest annualized return of 8.21% to its investors followed by Alfalah GHP Cash fund (8.62%) and AKD Cash fund (8.67%) respectively.
When these returns were adjusted against inflation, the real return for the first quarter of ongoing year were observed as:
Any excess earnings that are generated by the way of interest on the portfolio holdings are distributed to the investors in the form of dividend payouts, as the companies are not obliged to make dividend payments on their stocks. But the investors who are looking for dividend income may find dividend paying money market funds a better option than that of funds that do not offer any dividend to their investors.
Atlas Money Market Fund recorded a highest payout of Rs 28.25 per unit followed by Faysal Money Market Fund Rs5.5 per unit and HBL Cash Fund-C Rs 2.46 per unit. The lowest payout was given by ABL Cash Fund at Rs 0.22 per unit during Jan-Mar 2019.
Money Market Mutual Funds
Payouts / Unit
ABL Cash Fund
Alfalah GHP Money Market Fund
Askari Sovereign Cash Fund
Atlas Money Market Fund
Faysal Money Market Fund
First Habib Cash Fund
HBL Cash Fund-C
JS Cash Fund
MCB Cash Management Optimizer
NAFA Government Securities Liquid Fund
NAFA Money Market Fund
UBL Liquidity Plus Fund-C
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