Mutual funds performance review: April 2017

The month of April was a story of two halves for the stock market. The first half was full of jitters, low volume and anxiety all due to the panama case verdict. The second half of the month started after the announcement of the panama verdict and was totally opposite to that of the first half.

The benchmark KSE-100 index moved up 2.4 percent in April after regaining almost 4.5 percent within two trading sessions after the panama verdict. As far as the investment flow is concerned, the stars of this show were the banks who were buyers at the bottom and sold within a couple of days to book massive trading gains for their respective treasuries.

The support to the market, however, was provided by mutual funds which ended the month with a net inflow of about $108 million aided by corporate inflows after some clarity on the political front. Singing the same tune, the foreigners yet again were net sellers in April with a net outflow of $36 million. Individual investors panicked the most during the whole saga and were net sellers with $52.9 million.

Sector wise, the auto and auto-parts sector continued to show strength. Stocks of top auto manufacturers like PSMC, INDU and HCAR were among the top performing stocks for the month.

According to data compiled by MUFAP (Mutual Funds Association of Pakistan), equity funds posted an average return of 3.01 percent in April. JS Large Cap Fund was the best performer in this category with a return of 5.36 percent. Scrips such as PAEL, THALL, AGIL and CEPB contributed towards generating alpha for the fund.

National Investment Unit Trust was the second best performing fund in this category with a return of 4.10 percent.

Shariah compliant mutual funds returns averaged at 3.62 percent versus the KMI-30 Islamic benchmark index return of 3.20 percent.

The top performing fund in this category was the JS Islamic Fund with a return of 6.13 percent. The second spot went to Meezan Islamic Energy Fund with a return of 4.41 percent.

Looking forward, mutual funds have started to adjust their portfolios with the upcoming budget which is expected to favour the infrastructure plays. The month of May will also finally bring in clarity on foreign inflows in light of MSCI Emerging Market upgrade.