A fund that has a higher standard deviation is, by nature, riskier than its peers. A popular way to measure the level of risk inherent in an equity portfolio is to measure the standard deviation or volatility in the daily returns of each fund. An asset manager who manages to generate outsized returns may look like a good bet, but if his portfolio is concentrated in volatile and illiquid stocks then an optimal mix of risk and return has not been achieved. For investors this is a strong indicator that in addition to decisions about asset allocation, the choice of asset manager is of paramount importance.Įquity-based: All mutual funds post net profit in MarchĪnother factor that investors do not take into account is the level of risk taken by asset managers to achieve their respective levels of return. Secondly, out of these 11 funds only three (Lakson Equity Fund, NAFA Stock Fund and Atlas Stock Market Fund) were able to outperform the KSE-100 Index return of 0.98% during Q1CY16. Table 1 shows some interesting facts firstly, there is a significant variance of 8.47% between the top performing fund (+2.61%) and the worst performing fund (-5.86%). Out of the 20 equity funds currently in operation, 11 of them meet this minimum fund size requirement. For the purpose of analysis, the universe of equity funds has been restricted to those with a minimum of Rs1 billion.
BEST PERFORMING MUTUAL FUNDS FEB 2016 PROFESSIONAL
Therefore, it is crucial to see how various professional asset managers fared during this quarter and whether they were able to outperform the market without taking undue risk. In such an environment, retail investors often find it difficult to efficiently manage their portfolios and often succumb to the herd mentality of panic selling during a rout and buying only after a strong rally. The benchmark KSE-100 Index dropped sharply in January (-4.62%), remained flat in February (+0.23%) before recovering in March (+5.64%) and ended the quarter marginally up by 0.98%. Mutual fund performance: AKD Opportunity Fund ranked best in 2015 Strong macro and company fundamentals were partly neutralised by market dynamics such as foreign selling and regulatory investigations into leading business groups and brokerage houses. The Pakistan Stock Exchange (PSX) has remained highly volatile during the first quarter of calendar year 2016 (Q1CY16).