BMA CHUNDRIGAR ROAD SAVINGS FUND (BCSF)
The BMA Chundrigar Road Savings Fund seeks to provide its investors with an attractive rate of return by investing in all fixed income and money market instruments of medium risk and short duration. The fund will seek to maintain a rupee weighted average maturity for the investment portfolio of not more than 5 years.
|Fund Type||Open End|
|Category||Aggressive Income Fund|
|Cut‐off time||4:00 PM|
|Front end Load||upto 1%|
|Back End Load||Nil|
|Fund Stability Rating||A+ (F) (PACRA)|
|Auditor||A. F. Fergusons & Co.|
|Transfer Agent||Technology Trade|
|Legal Advisors||KMS Law Associates|
|Management Quality Rating||AM3|
|*This includes 0.29% of SECP Fee & Govt. Levy|
During Mar’17, the fund posted a return of 7.74% against the benchmark return of 6.41%, outperformed the benchmark by 1.33%. In FY17TD, fund posted a return of 5.41% with under performance of 0.97% against the benchmark. The current allocation of the fund is as follows: 50.79% invested in Cash, 5.14% invested in PIBs, 29.35% placed with Banks as TDRs and 14.10% in a commercial paper. Portfolio and benchmark standard deviations were 0.22% and 0.67% respectively. Portfolio duration was at 181 days while the weighted average maturity was also at 181 days. Based on recent developments at macro front, we believe that current allocation is quite attractive. However, we will rebalance the same incase of any uncertain event.
PORTFOLIO RATING PROFILE
CPI for Mar’17 clocked in at 4.94% YoY/0.84% MoM against the CPI of 4.22% YoY/ 0.28% MoM for Feb’16. Resultantly, 9MFY17 inflation stood at 4.01% YoY against 2.64% YoY during the same period last year. Yearly inflation can be attributed to 16.1% YoY hike in the prices of perishable food items, followed by 13.8% YoY increase in health cost and 10.9% YoY increase in Education head. We expect inflation to remain in manageable range of 4.1%-4.4% during FY17, however, continued recovery in commodity prices and expected rupee devaluation can put some inflationary pressure during FY18.
The State Bank of Pakistan (SBP) kept the policy rate unchanged for the 5th consecutive time at 5.75% in its Mar’17 Monetary Policy for the next two months. According to MPS, real economic activity is gathering pace at the back of better agricultural output, increase in key LSM sectors, and a healthy uptick in the credit to private sector but drop in exports has widened the the current account deficit (CAD). Therefore, SBP has maintained the status quo, which is in line with the market expectations. We believe manageable inflation outlook in near future has waved off any chances of hike in policy rate till July ’17.
Current account deficit for Feb’17 clocked in at hefty USD 744mn compared to USD1.2bn in Jan’17 owing to coalition support fund receipts and 6% MoM drop in imports. Resultantly, 8MFY17 has mounted to USD 5.47bn (1.7% of GDP), mainly attributed to 11% YoY surge in imports, which has been exacerbated with weak exports (-2% YoY in 8MFY17) and tepid remittance flows (-2.5% YoY). Going forward hike in import bill due to increase in oil prices and declining exports will prompt further weakness in CAD, though contained somewhat by CSF inflows and seasonal recovery in remittance during 4QFY17.
In the PIB auction conducted during the month, government raised Rs. 28.56bn against the bids received of Rs. 70.84bn. The cut-off yields remained unchanged at 6.41%, 6.90% and 7.94% for 3-yr, 5-yr and 10-yr tenors respectively, where the activity was more tilted towards 3-year tenor, whilst all bids for 20-yr PIBs were rejected by the SBP. During second t-bills auction of the month, the cut-off Yield for 3-months t-bills went up by 4bps.
Disclosure: The scheme has maintained provisions against Workers’ Welfare Fund (WWF) liability to the tune of Rs. 142,576 as of Jun 30 , 2015 . Had the provision not been made, the NAV per unit/percentage return of the Fund would be higher by Rs. 0.002/0.02%. Details are specified at note 8.1 to the latest period ended report of Jun 2016. Performance data does not include the cost incurred directly by an investor in the form of sales load etc. Effective from July 1, 2015 no provision is being made as mutual funds have been excluded from levy of WWF vide Finance Act 2015.