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 June’17, the fund posted a return of 6.78% against the benchmark return of 6.46%, outperformed the benchmark by 32bps. In FY17, fund posted a return of 5.51% with underperformance of 86bps against the benchmark. The current allocation of the fund is as follows: 66.59% invested in Cash, 6.45% invested in PIBs, 9.21% placed with a Bank as TDR, 9.21% in TFC(Pre-IPO) and 8.96% in commercial papers. Portfolio’s standard deviation was on the higher side at 5.10% due to adjustment of dividend to the NAV. Fund paid a divided of 0.45/unit during FY17. Portfolio duration was at 441 days while the weighted average maturity was also at 441 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 in Jun’17 clocked in at 3.93%YoY against 5.02%YoY in the preceding month, taking the average inflation in FY17 to 4.16% against the 2.86% during FY16. On sequential basis by CPI dropped by 0.41%MoM, mainly due to 0.20%MoM drop in food prices against the general expectations on the back of Ramadan, 15.32%MoM drop in Tobacco index following budgetary measures and drop in fuel prices. We believe the expected depreciation of Rupee might put some inflationary pressure, however contained somewhat by the decline in oil prices and food prices post Ramadan.
State Bank of Pakistan (SBP) has revised the 11MFY17 current account deficit figures to USD10.64 billion, which is USD1.71bn higher than the earlier reported figure of USD8.92bn. The 11MFY17 deficit is 2.1x wider than the revised figure of USD4.86bn during the same period last year. The widening CAD can mainly be attributed to growing trade deficit led by higher imports (both goods and services), which increased by 14% YoY.
Country’s foreign exchange reserves stood at USD21.4bn as of June 30, 2017. In the scenario of widening CAD and debt payments up to USD5.0-6.0bn during FY18 we see a high probability of sharp FX reserves drawdown and steep currency devaluation in FY18. PKR remained stable during the month and FY17, however, SBP has taken the move to depreciate exchange rate by 3.1% in the interbank market after a long period of stability. However, in recent development the finance minster has intervened and the rupee recovered sharply. With REER standing at 127, we believe the depreciation is very much on the card.
In the PIB auction conducted during the month, bids worth Rs. 78.24bn were received, where much of the activity remained tilted towards the shorter tenor instrument of 3-yr PIB. The cut-off yields for 3-yr, 5-yr and 10-yr PIBs clocked in at 6.41%, 6.90% and 7.94% respectively whilst no bids were received in 20-yr tenor. The govt also raised 526.6bn in T-bills auction with no change in cut-off yields.
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.