Mr Abdul Samad – Chief Investment Officer (CIO), has more than 10 years of experience in the field of Equity and Fixed Income Research and Investment Management. He has been associated with Atlas Asset Management Limited (AAML) since Nov 2005 and during his tenure he has been successful in implementing the complete investment process at AAML with the technical assistance of ING. As the CIO of AAML, he watched over all the funds namely, Atlas Money Market Fund (AMF), Atlas Stock Market Fund (ASMF), Atlas Income Fund (AIF), Atlas Islamic Stock Fund (AISF), Atlas Islamic Income Fund (AIIF), Atlas Pension Fund and Atlas Islamic Pension Fund.
AMF in the beginning was kept under the CIO’s supervision; the aim was to post competitive returns with high liquidity and low risk as mutual fund investors faced losses during 2008. AMF is managed very actively as the fund manager foresees unstable interest rates, hence short duration has been kept since the inception of the fund. In comparison to money market funds, AMF has generated above average returns, providing its investors with high liquidity. Currently, the fund manager foresees that discount rates will further decrease; hence the present level of duration has been increased above its historic average.
AMF has registered above average returns while keeping volatility lower than category average. Portfolio liquidity is high, which makes the fund stable for investors. AMF started with Rs829m assets under management and presently stands at Rs3.5b as of Sept ’11. The fund size has grown at a steady rate and since inception the fund has grown by 338 per cent in 21 months, with no major outflow near financial- or calendar year –end showing investor confidence.
Total expense ratio of AMF till Mar ’11 stood at 1.07 per cent, whereas the management fee of AMF is 1.00 per cent per annum, that is, lower than
category average.
Pro-active management by the fund manager brings the fund in the top five money market category on the basis of returns. Historic pattern of fund asset allocation also suggests that the fund manager has fully utilised all possible avenues available; moreover, he has been successful in negotiating better returns from these avenues.
The current composition of assets is as follows, T-Bills (86.7 per cent), term deposits receipts (8.3 per cent) and cash balance (4.81 per cent) with 64.3 duration. AMF, in FY11 has posted a return of 11.29 per cent (net of management fee, Workers’ Welfare Fund (WWF) provisioning & all other expenses).
The fund would be highly recommended for investors looking for money market funds as it offer high liquidity, stable returns and steady income stream. However, after the recent 150bps cut in discount rate by the State Bank of Pakistan, AMF wouldn’t be the best place for retail investors to put their savings in as commercial banks are offering better returns due to the current shortage in liquidity.
Recommendation: SELL
