Money Market Funds’ Review: Askari Sovereign Cash Fund calls the shot!

September 16, 2019 (MLN): The Money Market Mutual Funds delivered yet another splendid performance as compared to its counterparts during the month of August, 2019, for most of the particulars operating within this fund generated extremely positive returns. Needless to say, the fund lived up to its objective of providing investors with a high level of liquidity along with extremely low credit and price volatility.

To understand the overall picture more palpably, we have evaluated the returns of the leading money market funds in the chart above, against an average benchmark rate, which is a weighted average of 3m PKRV rates and the average of 3 month deposit rate of 3 “AA” rated scheduled banks selected by Mutual Funds Association of Pakistan (MUFAP).

The three “AA” rated scheduled banks selected by MUFAP are Sindh Bank, Faysal Bank and Bank of Punjab. Meanwhile, 70% of the benchmark comprises of the average 3m PKRV rate for the month while the remaining 30% accounts for the 3 month average deposit rate of the said scheduled banks. Keeping in perspective this criteria, the benchmark rate for the month of August has been set at 11.88%.

As evident from the chart above, 10 out of 11 mutual funds surpassed the yardstick, whereas the remaining one missed out on it by a slight margin. Amongst the stayers, Askari Sovereign Cash Fund (ASKARISCF) emerged as the clear winner as its Net Asset Value (NAV) leapt from Rs. 101.8 per share in last month to Rs. 103 per share this month, registering a return of 13.5%.

Alfalah GHP Cash Fund (AGHPCF) came second in line, as its NAV rose from Rs. 503.9 per share to 509.48 per share, signifying a net return of 13%. With a ‘low’ risk profile, AGHPCF held most of its investment in the form of Cash and T-bills.

JS Cash Fund (JSCF) took the third lead as its NAV hopped from Rs. 102.7 per share to Rs. 103.8 per share, demonstrating a net return of 12.9%. JSCF lost its position to AGHPCF by an insignificant margin, as its net return was just 0.1% short of those generated by the latter. However, it clearly outperformed its peers by having an ‘extremely low’ risk profile, as well as a rating of ‘AA+(f)’ by PACRA. Furthermore, JSCF held its investments in the form of Cash and T-bills.

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