| Investment Process |
 |
 |
|
| |
| Benchmark for AHIML Funds |
|
|
In performance evaluation, a benchmark serves as a standard of measurement. It helps investors determine whether the fund manager has created value for him, keeping in mind the risk profile of the investor. The most important feature of a benchmark is that it should reflect the investable assets and asset classes of each fund which is benchmarked against it. Hence, simply using KSE100 Index as benchmark for equity funds is not appropriate because of the skewness in the index. The KSE100 Index has about 14% weight in OGDC and more than 30% weight in the banking sector. Both these weights are more than the allowed company and sector limits of mutual funds under the NBFC Rules. Furthermore, comparing performance of an asset allocation fund to just KSE100 Index or only KIBOR is not appropriate since these funds are allowed investment in both asset classes. Similarly performance of a Shariah compliant mutual fund should not be compared to performance of a conventional equity fund. |
| |
Keeping these factors in mind, Arif Habib Investment Management Limited has developed separate benchmarks for each of its funds, which reflect 1) the investment objective of that fund, 2) investment limitations as per the NBFC Rules for mutual funds 3) availability and investability of the various assets and asset classes. |
| |
| Development process: |
Investable asset classes were defined and an index for measuring performance of each asset class was identified. For example, for CFS, weighted average CFS rate will form the asset class return for the period under review. Similarly, performance of the TFC / Bond asset class was linked to KIBOR. For benchmarking equity returns, a customized portfolio of 50 companies has been developed, based on the company’s historical financial performance, liquidity and market capitalization. While each company weight has been assigned on the basis of market capitalization, company and sectoral limits as set by the NBFC Rules have been taken into consideration. |
|
|
PSM: Being an open-end equity fund, the benchmark for PSM primarily constitutes the customized equity portfolio, with a small portion assigned to cash. |
| |
PCM: As an asset allocation fund, an adequate representation has been given to the bond / TFC index, though major portion of the benchmark constitutes the customized equity portfolio. A small amount has also been assigned to cash, since being an open end fund, PCM has to maintain some cash for redemption purposes. |
| |
| PIF: The benchmark for PIF has allocation in Bonds / TFCs, CFS Futures and cash and near cash asset classes. |
| |
| PIIF: Benchmark is currently being developed. |
| |
| MSF: MSF benchmark consists almost entirely of long & short tenor government bonds and reverse repo against these bonds. |
| |
| PPF: The benchmark consists almost entirely of the customized equity portfolio. |
| |
| PSAF: The benchmark consists of the customized equity portfolio and a portion of cash and near cash assets. |
| |
The above or below benchmark returns do not incorporate the expenses which the fund has to incur on active management. These benchmark returns, thus obtained, are reduced by the average expense ratio incurred by the respective funds to arrive at comparable net benchmark returns. |
| |
Frequency of review:
The benchmarks will be reviewed once a year to reflect the changes in the capital markets and investability of various asset classes.
|
| |
| Funds & Benchmark Performance - MoM |
From |
To |
|
|
|
|
|
|
01-Oct-07 |
31-Oct-07 |
|
|
|
|
|
|
|
|
PSM |
PCM |
PPF |
PSAF |
PIF |
MSF |
Benchmark performance net of costs |
5.54% |
4.15% |
5.68% |
3.59% |
0.70% |
0.36% |
Actual Performance during the period |
8.22% |
8.28% |
7.53% |
6.04% |
0.74% |
0.73% |
Over / (under) performance |
2.68% |
4.13% |
1.85% |
2.45% |
0.03% |
0.37% |
|
| |
From |
To |
|
|
|
|
|
|
01-Sep-07 |
30-Sep-07 |
|
|
|
|
|
|
|
|
PSM |
PCM |
PPF |
PSAF |
PIF |
MSF |
Benchmark performance net of costs |
9.54% |
7.09% |
9.79% |
6.10% |
0.38% |
-0.17% |
Actual Performance during the period |
11.16% |
9.73% |
11.90% |
12.15% |
0.73% |
0.65% |
Over / (under) performance |
1.62% |
2.64% |
2.11% |
6.05% |
0.35% |
0.82% |
|
| |
|
|
|
|
|
|
|
|
From |
To |
|
|
|
|
|
|
01-Aug-07 |
31-Aug-07 |
|
|
|
|
|
|
|
|
PSM |
PCM |
PPF |
PSAF |
PIF |
MSF |
Benchmark performance net of costs |
-10.98% |
-8.02% |
-11.27% |
-6.85% |
0.55% |
-0.23% |
Actual Performance during the period |
-9.22% |
-8.01% |
-8.86% |
-8.70% |
0.89% |
0.48% |
Over / (under) performance |
1.76% |
0.01% |
2.41% |
-1.85% |
0.34% |
0.71% |
|
| |
From |
To |
|
|
|
|
|
|
01-Jul-07 |
31-Jul-07 |
|
|
|
|
|
|
|
|
PSM |
PCM |
PPF |
PSAF |
PIF |
MSF |
Benchmark performance net of costs |
0.02% |
0.08% |
0.02% |
0.11% |
0.54% |
0.26% |
Actual Performance during the period |
0.75% |
1.21% |
0.41% |
0.74% |
0.72% |
0.74% |
Over / (under) performance |
0.72% |
1.13% |
0.38% |
0.62% |
0.18% |
0.48% |
|
| |
| |
| |