Money Market Review: JS Cash Fund remains the smart choice to get good returns

December 20, 2019 (MLN): This time, again, money market mutual funds remained attractive for investors due to competitive returns with a high level of liquidity. All funds generated highly positive returns in the month of November due to ensuring financial security in the long run through pool investment.

The performance of money market mutual funds is 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.

As per calculation, the 70% average of 3M PKRV rates came out as 9.41% whereas 30% 3M average deposit rate of 3 AA rated is 3.34%. Thus, the benchmark has been set at 12.78% for the month of November 2019.

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.

A performance chart put together by Mettis Global shows that all twenty-two money market funds recorded their annual return within a range of 11.04%-12.10%.

It is prudent to mention that no single money market mutual fund surpassed the benchmark rate during the said period.

According to records maintained by Mettis Global Private Limited, JS Cash Fund (JSCF) stood on top of the pyramid amongst all other money market funds during November 2019. The fund gave an annual return of 12.10%, underperforming the benchmark by 0.68 bps. Its adjusted Net Asset Value dropped marginally from Rs.102.84 per share to Rs.102.71 per share.

The nine-year-old JSCF carries an extremely low-risk profile and has had its fund’s stability rated at ‘AA+’ by the Pakistan Credit Rating Agency (PACRA), while VIS (formerly known as JCR – VIS) rated its management quality at ‘AM2’, as of December 2018.

Around 68% of the net assets of the fund were invested in T-Bills whereas 16% of total assets were in the form of cash. Some investment of around 4% was allocated in short term Sukuk.

Following JSCF closely is ABL Cash Fund (ABLCF), as its NAV increased to Rs.10.35 per share from Rs.10.25 per share with an annualized return of 12.09%. The asset allocation of the fund changed significantly as the fund invested more in bank deposits, increasing allocation from 66.43% in Oct 2019 to 87.12% in November.

UBL Cash Fund (UBLCF) came third in line with annual returns standing at 12.05%. Its NAV stood at Rs.101.19 per share in October which increased to Rs.102.19 per share. With high liquidity, the investment of UBL Cash Fund was observed in the form of cash only. VIS (formerly known as JCR – VIS) rated its management quality at ‘AM1’.

This was followed by Pakistan Cash Fund Management (11.99%), Lakson Money Market Fund (11.94%).

Speaking of payouts, Atlas Money Market Fund gave the largest total payout of Rs 4.8 per unit during November 2019, followed by Lakson Money Market Fund, giving a total payout of Rs 2.19 per unit whereas First Habib Cash Fund paid Rs.2.10 per unit in November 2019.

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