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 0.37% of SECP Fee & Govt. Levy|
During May’17, the fund posted a return of 4.76% against the benchmark return of 6.45%, underperformed the benchmark by 1.69%. In FY17TD, fund posted a return of 5.36% with underperformance of 1.03% against the benchmark. The current allocation of the fund is as follows: 33.70% invested in Cash, 5.91% invested in PIBs, 33.69% placed with Banks as TDRs and 24.54% in commercial papers. Portfolio’s standard deviation was 0.03%. Portfolio duration was at 185 days while the weighted average maturity was also at 185 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 May’17 rose to its highest since Oct’14 as the CPI figures clocked in at 5.02%YoY/0.01%MoM against the CPI of 4.78%YoY/1.40%MoM in the preceding month. Resultantly, 11MFY17 inflation stood at 4.17%YoY against 2.83%YoY during the same period last year. Monthly inflation figures can be attributed to 10%MoM (-1.69 %points) drop in the food (perishable & Non-perishable) prices, which was countered by a slight increase of 1%MoM (+1.37 %points) by heavy weight head of House, water, electricity & gas. For June-17 we expect inflation to clock in between 5.0%-5.2%, due to slight increase in food index, taking our FY17 inflation expectation to 4.25% against the figure of 2.83% in FY16.
State bank of Pakistan (SBP) kept policy rate unchanged in its latest monetary policy announcement, ascribing its decision to growing domestic demand depicted by FY17 provisional real GDP growth of 5.3% and a stable inflationary environment. The SBP attributed private sector credit expansion (51%YoY growth in private sector credit) to low interest rates and expects similar demand for credit to continue in FY18. On the external side SBP highlighted the widening current account deficit, crediting it to the slowdown in exports & workers’ remittances amid surge in import payments. However, going forward SBP expects official inflows to support foreign exchange reserves.
Current Account Deficit (CAD) was recorded at USD1.1bn in Apr’17, a 2.1x MoM increase to the last month. Resultantly 10MFY17 CAD has reached to the level of USD7.2bn compared to USD2.4bn in the same period last year. The increase is mainly attributable to 36%YoY increase in trade deficit. On the other hand, financial account surplus of USD623mn in Apr’17 managed to reduce the balance of payments deficit to USD 0.4bn (-34% MoM). Going forward the seasonal recovery in remittances and inflows under CSF can provide some relief to the widening CAD.
In the PIB auction conducted during the month, government raised Rs.40.66bn against the bids received of Rs.85.49bn. 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. The government also raised PkR.712bn in two T-bills auctions, where the cut‐off Yield for 12‐months T‐bills went up by 2bps in second auction.
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.