Ms Nazia Enam Siddiqui took over as the fund manager of JS Cash Fund (JS-CF), after Dr Ali Akhtar Ali was promoted to the position of chief investment officer August 2010. She has been working in the investment field for more than 15 years. She is responsible for JS Cash Fund (JSCF), JS Income Fund (JSIF), JS Aggressive Income Fund (JSAIF).
Initially the JSCF was a passive fund as it had nearly 97 per cent plus cash deployed in market treasury bills till the new fund manager came, since then the fund seems a bit vigilant as well in trying to beat the category average return and with that it has diversified its investment in other money market instruments.
After the KSE-100 index touched the historic high of 15 thousand points, it was followed by a crash that reduced the index to roughly 5000 points and in addition to this Karachi Stock Market remained closed for a few months. While this was happening, in the debt market term finance certificates prices were slashed as per the order of the regulators which later were revived. However, before this all began JS Investment Limited (JSIL)was the market leader of the asset management industry, and it was the market leaders that retail investors were attracted to mutual funds. In short, after the 2008 debacle JSIL’s fund size contracted and even after things were back to normal was unsuccessful in making a comeback.
However, the whole management at JSIL was overhauled from top to bottom, and like all other asset management companies JSIL launched a money market fund.
Since inception, the fund mostly is posting above category average returns, with an above average volatility in returns. However, volatility of returns in a money market fund should not be a major concern for one as returns hover around the same magical digits, that is, 11 and 12 across the board in this category.
The liquidity of the fund has been kept very high compared to peerfunds, a lesson well learnt but JSIL is not benefiting from it as the fund size since launch till Jun-11 (15 months) is standing at the Rs1.44 billion. Whereas, funds launched after JSCF have shown growth and that to in double digits.
After the management change, the management fee for JSCF was revised down from 1.50 per cent to 1.00 per cent, and according to the Mar-11 the total expense ratio was 0.94 per cent. This means to an investor this fund would be costing him around 1.30 per cent per annum, which is a bit below the category average.
JSCF is invested in 68 per cent T-Bills, 18 per cent Cash and 14 per cent with DFI’s as at Jun-11, whereas if we look up at the historical pattern this is the first time that the fund has gone so low on T-Bills, and this normally happens in two situations better rate than T-Bills if being offered and secondly a rate cut is expected. However, in this case latter was the reason as the duration of the fund stood at 70 days which explains that the fund manager was actually foreseeing a rate cut. Overall, the fund in FY11 has posted a return of 11.69 per cent (that is, net of management fee and all other expenses).
The management seems to be working hard for the revival of JSIL previous image, which in future can be easily gauged from the fund size that they are able to gather. However, JSCF is better in generating returns and costs less than a few money market funds that have Rs10 billion under their belt.
