October 8, 2019 (MLN): The consistent and outstanding performance of The Money Market Mutual funds has once again been observed during July-Sept’19, first quarter of FY20. Most of these funds generated highly positive returns. Due to the safest approach, investors had experienced the best of both worlds; high returns and extremely low risk that was put in place in 1QFY20.
The gains by the leading money market funds have been assessed against an average benchmark rate; 70% 3 month PKRV and 30% 3 month average deposit rates of 3 ‘AA’ rated schedule banks as selected by MUFAP which has been set at 12.59% for the 1QFY20.
On a side note, the three ‘AA’ rated scheduled banks selected by the Mutual Funds Association of Pakistan (MUFAP) are Sindh Bank, Faysal Bank and Bank of Punjab.
According to records maintained by Mettis Global Private Limited, 9 out of 21 money market mutual funds surpassed the benchmark rate, while only one, missed it out by a meagre margin. JS Cash Fund (JSCF) emerged as a top victor amongst all other money market funds during the first quarter of FY20.
The fund gave an annual return of 12.95% as its adjusted Net Asset Value leapt from Rs.101.59 per share to Rs.102.77 per share.
The nine-year old JSCF carries an extremely low risk profile and has had its fund’s stability rated at ‘AA+’ by Pakistan Credit Rating Agency (PACRA), while VIS (formerly known as JCR – VIS) rated its management quality at ‘AM2’, as of December 2018.
The largest portion of JSCF’s portfolio consisted of cash investments throughout most of the year while the remaining portions were invested in Treasury Bills and commercial papers. The fund gave a payout of Rs.0.71 per unit on June 24, 2019.
As per Mettis Global’s records, the largest portion of JSCF’s portfolio consisted of Treasury Bills as of Aug’19. The fund gave a payout of Rs.1.11 per unit on October 5, 2019.
During first quarter, 9 out of 21 money market mutual funds surpassed the benchmark rate, while only one, missed out it by a meagre margin. Among the top 9 performers, JS Cash Fund (JSCF) appeared as a top victor as its Net Asset Value (NAV) increased from Rs.101.59 to Rs.102.77 with annualized total return of 12.95% during the said period.
Following JSCF closely is Atlas Money Market Fund (AMMF) with annual returns standing at 12.84%. Its NAV stood at Rs.503 per share at the start of FY20 and has now risen to Rs.505.22 per share. With a less risk, a significant portfolio investment of AMMF was observed in the form of T-bills.
ABL Cash Fund came third in line, as its NAV increased to Rs.10.23 per share from Rs.10.15 per share with annualized return of 12.72%. This was followed by MCB Cash Management Optimizer (12.69%), Alfalah GHP Cash Fund (12.68%).
Speaking of payouts, UBL Liquidity Plus Fund gave the largest total payout of Rs.3.045 per unit during July-Sept’19, whereas MCB Cash Management Optimizer paid Rs.2.89 per unit during the 1QFY20.
In general, the money market lived up to its name for being one of the safest and least risky place to invest money in an economy suffering from volatility of stock market.
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