Assets Held by Mutual Funds Dip Below Rs. 1 Trillion

The values of assets under mutual funds being managed by asset management companies have decreased to below Rs. 1 trillion by the end of January 2022.

According to the official statistics updated by the Mutual Funds Association of Pakistan, the values of assets under mutual funds of various categories stood at Rs. 966 billion by the end of December, which decreased by 12 percent from 1.089 trillion reported by the end of December 2021.

The outflow of investments and savings from mutual funds is attributed to a seasonal drop in relation to the annual targets besides the expectation of lower or stable margins from money markets.  Investors switched from mutual funds from other avenues of investment as the policy rate is unlikely to go up, which will not impact on margins positively of mutual funds in the near future.

There is this term called ‘January Effect’ that shows that in January, mostly investors invest in the equity market after keeping themselves liquid in the previous month due to various reasons. We usually see this influx during January, said an analyst from Arif Habib Limited, Sana Tawfiq.

Secondly, after the clarity from the SBP in the form of forwarding guidance, now investors are aware that there might not be any change in interest rates as such. Even if there is any change, the quantum will be lesser than the previous ones, which means that money market yields (kind of) have peaked out here. This, too, could be one reason for the reshuffling of portfolios from MM to other riskier (and better yielding) avenues, she added.

The average profit rate of the income funds and money market funds stood at above 10 percent. National Investment Trust(Equity) remains the major fund manager with Rs. 59 billion asset values. It is followed by Meezan Rozana Amdani Fund with Rs. 47 billion, HBL Cash Fund with Rs. 43 billion, and MCB Cash Management Fund with Rs. 40 billion.

Various corporations, individuals, banking, and financial sectors are dominant investors of the mutual funds in the country. Besides mutual funds, assets held by asset management companies include pension funds with Rs. 38 billion value of investments and savings and exchange-traded funds with a value of Rs. 277 million.

In 2021, mutual funds’ assets grew from Rs. 913 billion to Rs. 1.089 trillion. During the year, the industry witnessed volatile trends as active investors switched their investments from mutual funds of the equity market to the money market. Assets values of mutual funds crossed a mark of Rs. 1 trillion for the first time in the outgoing month, which will likely be sustained in the present year.

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