UTP-Income Fund, a fixed income fund under management by ABAMCO Limited has recently been awarded a 5-star rating by The Pakistan Credit Rating Agency, PACRA and is the first fund to be rated since the implementation of the system. A 5-Star rating means that the fund scores superior performance relative to its peers.
The new rating system compares funds within their own categories and drills deeper into the past and projected performance of the fund based on strictly quantitative analysis. It takes into account the absolute and risk adjusted returns, which gives a deeper insight into the quality and of returns the fund is generating, not only in terms of their volume, but also keeping into account how regular and steady they may be.
Total returns are calculated by measuring the change in the NAV of the fund over the period, after adjusting for payouts and adjustments in capital (in case of closed end funds). The weighted average yield of the 3-month T-bill is used as risk-free returns bench mark and is used for determining the Risk Adjusted returns using the Sharpe Ratio.
Since the commencement of the current fiscal year, funds under ABAMCO’s management have persistently maintained their edge over others in their respective categories in terms of performance. ABAMCO’s flagship fund, Unit Trust of Pakistan (UTP) has achieved an absolute return of 39.78% while UTP-Aggressive Asset Allocation fund has surpassed all limits in terms of returns for an open end fund in Pakistan. It has an absolute return of over 98% as at February 13, 2006. ABAMCO is already managing assets in excess of Rs. 26 billion for over 35,000 investors. The company has also launched the country’s first Shariah compliant mutual fund, the UTP-Islamic Fund and the first Fund of Funds, both of these funds have returns in excess of 70%.
As the year continues to progress, the investment scenario in Pakistan is set to change further, mostly due to the privatization of NIT by the end of the current fiscal year. According to news reports, NIT will be privatized into six components of which three will be put up for competitive bidding.
Considering the attention being generated by the Karachi Stock Exchange amongst international investors, the NIT is well poised to generate significant international interest while Asset Management companies based locally will be relying on the experience and expertise they have in the local market, which adds significant strength to their capability, considering that the local market is under constant evolution both in terms of regulatory structures and systems.
Pakistan’s largest asset management company in the private sector, ABAMCO, will also be participating in the bid to retain its lead not only in terms of assets under management, but also in terms of the number of clients served and the returns of its funds.
