March 4, 2019 (MLN): Rising interest rate brings about a change in the way investors perceive risk and return. In such an environment investors become risk averse, and will naturally opt for higher fixed rate of returns rather than an uncertain and potentially lower rate of return from equities. Hence, risk is given the first prerogative and returns are considered next.

When interest rates increase, there is a flight of capital into fixed income as an asset class from equities. Investors might be more willing to park funds into fixed income securities like bonds, fixed deposits etc.

During the month of February 2019, Out of 20 money market mutual funds currently in operation, JS cash funds outperformed the rest of the funds with annualized total return of 9.79% followed by Atlas Money market fund (9.64%), Pakistan Cash Management Fund (9.62%) and Alfalah GHP Money market Fund (9.61%).

Within the list, UBL Liquidity plus Fund-C, UBL Money Market Fund, NAFA Money Market Fund and NAFA Government Securities Liquid Fund stood on fifth, sixth, seventh and eight position with an annualized total return of 9.45%, 9.43%, 9.42% and 9.40% respectively. While MCB Cash management optimizer relatively showed the lowest annualized return of 5.12% followed by HBL Money Market Fund with 8.15% annualized return.

Better performance of a fund is linked with the personal ability of the fund manager. Performance of a fund is viewed as the performance of a manager. A successful manager is the one who is able to beat the market on a regular basis.

During the month, Atlas Money Market Fund recorded a highest payout of Rs 4.5 per unit followed by JS Cash Fund Rs0.87 per unit, First Habib Cash Fund Rs 0.8 per unit. While the lowest payout was given by ABL Cash Fund of Rs 0.072 per Unit.

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