Mutual funds investors had a cheery month this time with returns on equity funds landing back in green. Mind you, the last two months had remained lackluster for equity funds with negative returns jolting their investor’s fate.
With a healthy gain of 12.3 percent during the month, equity fund category managed to outperform the benchmark KSE100 index by a decent 200bps, thus taking the year-to-date gain to 18.7 percent on an absolute basis. Moreover, a good number of 18 out of 22 funds in this category towered above the benchmark return, where NAFA Stock Fund and PIML Value Equity Fund maintained the lead with whopping returns of over 16 percent. This revival in stock market activity and hence the gain on equity funds was largely attributable to the excitement induced by the healthy financial results announcements of major sectors.
Besides, fixed income funds also made an impressive comeback with their monthly returns entering the double-digit territory once again. In recent months, the volatility in international oil prices had taken its toll on the prices of government securities bonds (Read BR Research column titled: Dismal March for mutual funds, published on April 02, 2015). However, that volatility is now ironing out while favoring the returns on fixed income funds.
Aggressive fixed income fund category, on average, generated a whopping monthly return of 18 percent, while income funds yielded a healthy return of 15.5 percent, thus tracing the levels spotted earlier during the year. Similarly, money market funds also did better than the preceding month. And considering that it was the month when selling pressures remain at the peak in treasury market owing to quarter end closing and hence the liquidity needs, the performance of money market funds happened to be fairly good.
With pre-budget uncertainties whirling around, the equity market is anticipated to stay dull. Therefore, it will be interesting to see how the fund managers are able to keep up the pace during such times. Also, for fixed income funds, there still seems to be some excitement in the offing with interest rates dropping further.
