Stock funds: Equity funds record negative returns amid political concerns

Wednesday, September 3rd, 2014 2:19:05 by


Each of the 21 equity-based conventional mutual funds operating in Pakistan posted negative returns in August amidst political turmoil in the country.

According to data compiled by the Mutual Funds Association of Pakistan (MUFAP), only three funds in August outperformed the Karachi Stock Exchange (KSE) 100-Share Index, which is typically the benchmark for almost all equity funds.

The KSE-100 index stood at 28,567 points at the end of August, down 5.76% from a month ago. The net asset value (NAV) of National Investment Unit Trust also came down by 5.76% during August.

Pakistan Strategic Allocation Fund remained the best equity fund last month, posting a return of minus 3.22%.

Atlas Stock Market Fund (-5.41%) and Lakson Equity Fund (-5.68%) were the other stock funds that posted returns better than the benchmark index in August.

The worst performing conventional equity fund in August was JS Large Cap Fund, which posted a return of minus 10.38%. It was followed by JS Growth Fund whose return was minus 9.22%. The third-worst performing mutual fund was AKD Opportunity Fund with a return of minus 8.63%.

Other equity funds performing worse than the benchmark index in the second month of the current fiscal year include PICIC Energy Fund (-8.55%), PICIC Stock Fund (-8.2%), First Habib Stock Fund (-7.83%), Askari Equity Fund (-7.01%), Alfalah GHP Alpha Fund (-6.92%), NAFA Stock Fund (-6.82%) and JS Value Fund (-6.8%).

Most of these conventional equity funds performed well in the last fiscal year. For example, AKD Opportunity Fund posted an annual return of 47.7% while the gains of PICIC Stock Fund and JS Value Fund were 40.3% and 34%, respectively, in 2013-14.

MUFAP data shows that each of the nine Islamic equity funds posted a negative month-on-month return in August.

The typical benchmark for Shariah-compliant equity funds, KSE Meezan Index (KMI-30), decreased by 5.08% in August. Only one of the nine Islamic equity funds – Atlas Islamic Stock Fund – posted a monthly return that was better than the KMI-30 in August.

According to KASB Securities, the KSE-100 emerged as the worst performing index in the world in August, although it is still up 13.1% since the beginning of 2014. Local mutual funds were the net sellers of liquidity ( million) in August, it added.

Published in The Express Tribune, September 2nd, 2014.

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