Assignment of Mutual Funds

Foreword: We are the students of BBA (Finance) and our Instructor of subject “Investments and Portfolio Management” give us an assignment regarding to the ‘Performance of Two Mutual Funds’. He require from us to tell him that which fund is performing better and giving better yield as he want to make some investments. We have learnt a lot of things about mutual funds. So, it is also helpful for us to gain some practical knowledge.

Acknowledgement: We are very thankful to our Honorable teacher Mr. M. Riaz who gave us the best understanding about the working of Mutual Funds and Stock Market as well. He made familiar us with deep and broad knowledge of  investing tools which will always be a guideline for all of us in our professional life.

Overview of the Assignment: We all group members selected two open-end mutual funds named MCB Dynamic Cash Fund (MCB DCF) and ABL Income Fund (ABL-IF). We took all key contents of both funds to compare their performance which mainly comprises of basic information, technical information, assets allocation, credit quality of portfolio and annual as well as last month returns. We have presented a meticulous comparison of both funds for excellent understanding of that person who has any sort s ort of interest in this study. After the detailed analysis of both mutual funds we have suggested to put investment in MCB Dynamic Cash Fund due to certain findings or reasons which are mentioned at the end of evaluation sheet of funds. BBA 7th (Finance) | REVOLUTIONERS

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Topic: Comparison of Two Mutual Funds Basic Information MCB Open ended income fund 6087million 102.06 1month KIBOR 1.5 low A+(f)

Fund Type Category Net Asset NAV Benchmark  Front end load Risk profits Fund stability rating

ABL Open ended income fund 6764million 10.1 1month KIBOR Nil low A+(f)

Technical Information MCB

ABL

Nil

Leverage Weight average Time to maturity of Net Assets

Nil

2.2 Years

38 Days

____

____

 

Asset Allocation MCB Oct.10 Sep.1 0 1.30% 3.30%

Cash Term deposit with bank 

0.00%

Oct.10

9.27%

0.00%

45.71%

35% 37.50%

TFC

ABL Sep. 10 5.62 % 31.0 5% ----

---Government Security

1.60%

1.60%

-------

55.20% 1.60%

T-Bills Other assets

49% 3.50%

38.81% 0.33%

43.49% 1.64%

Credit Quality of Portfolio (%of Asset) ABL MCB Governtment Securities AA+

62.10% 0.20%

43.49% 0.08%

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12.40% 5.70% 3.30%

AA A+ A

29.90% -------

Fund Return MCB

 Year to Date (YTD)

11.50%

Benchm ark 

12.40%

Trailing 12 Months

----

Month to Date(MTD)

2.0%

12.50%

10.20%

11.50%

Since Inception

----

ABL

Benchm ark 

10.78 % 10.84 % 11.13 % ----

12.40% 12.49% 12.50% ----

Findings / Observations: We have found certain observations on the basis of above mentioned comparison. 

Annual return of MCB is 11.50% while ABL is providing 10.78% while

last month return of MCB is 2.0 % and ABL is 11.13%. It is clearly shown that MCB is giving greater return than ABL .Here monthly return of MCB is less than ABL due to change in price anomalies by MUFAP but if we see the returns of previous months then MCB DCF is leading fund.  

It is evident that fund return of MCB is 72 bps higher is than ABL.

Return from MCB DCF is closer to the benchmark (1 Month KIBOR) as compare to ABL-IF.



MCB fund is more secured than ABL fund because its major investment is in T-bills or Government backed securities.



Management Expense Ratio of both funds are 1.5% annually while MCB is charging 1.5% Front-end load and ABL have no such type of load. Here, it is notable thing that MCB has no back-end load which facilitates the investor when he/she want to quit that pool of investments.

Conclusion: 3 BBA 7th (Finance) | REVOLUTIONERS

It is assessed that MCB Dynamic Cash Fund is overall a good fund to invest.

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