A)INTRODUCTION TO ARIF HABIB MUTUAL FUNDS
Arif Habib Investments Management is an asset management company, which has been
incorporated in 2000 and has recently launched a combination of investment plans based
on two Open-end & Closed-end mutual funds. The company is registered with the
Securities and Exchange Commission of Pakistan (SECP).
Arif Habib Investments Limited is an industry leader, setting international standards and
bringing innovative products to market. This is one of the fastest growing asset
management companies in the country, with 10 open-end including 2 Pension Funds and
3 closed-end and number of different investment plans to meet the investment needs of
their growing clientele.
Arif Habib Investments Limited manages about Rs. 16.316 billion (USD 190.496
million) in 13 mutual funds as of 30th June 2010. The company was conceived in March
2002 two of its flagship funds, the Pakistan Stock Market Fund (PSM) and the Pakistan
Income Fund (PIF) were launched. Arif Habib’s closed-end fund the Pakistan Premier
Fund Limited (PPFL) was also placed in KSE’s top 25 companies in 2005 and 2006.
Pakistan International Element Islamic Fund (PIIF) of Arif Habib Investments Limited is
the first mutual fund in the country with permission from the State Bank of Pakistan to
also invest overseas. The current Ratings of AHIL by PACRA are:
Asset Manager Rating of AHIL:
AM2 (Positive Outlook) 2010
Entity Rating of AHIL:
2009
Long Term Rating A
Short Term Rating A1
Arif Habib Investments Limited is part of the Arif Habib Group, with Arif Habib
Securities Limited (AHSL) as its main shareholder. AHSL is a listed company with a
capital and reserve base in excess of Rs. 18.840 billion (as of 31st December 2009). Arif
Habib Securities Ltd (the parent company) has received the KSE's Top 25 Companies
Award for the past 6 consecutive years.
Arif Habib Group is a multifarious Business Group of Pakistan whose main business
activities include Asset Management, Stock Brokerage Services and Arif Habib the
brokerage house. Besides asset management and brokerage, the group offers services
such as securities research, investment advisory, corporate finance and project advisory
services. The Group has also acquired membership of the Dubai Multi Commodities
Centre through its subsidiary Arif Habib DMCC.
The group also has significant interest in the industry, real estate development and Private
Equity.
B) ARIF HABIB MUTUAL FUNDS
MANAGEMENT
OPEN-END
1)
2)
FUNDS
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9) PAK STOCK MARKET FUND
10)
11)
12)
13) PAK INT. ELEMENT ISLAMIC FUND
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16) PAK INCOME FUND
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20) PAK CAPITAL MARKET FUND
21)
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23) METROBANK-SOVEREIGN FUND
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25)
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27) PAK PENSION FUND
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31) PAK ISLAMIC PENSION FUND
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35) PAK CASH MANAGEMENT FUND
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39) PAK INCOME ENHANCEMENT FUND
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41)
42)
43) PAK CAPITAL PROTECTED FUND-FIS
CLOSE-END FUNDS
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4)
PAK PREMIER FUND LTD
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8) PAK STRATEGIC ALLOCATION FUND
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12) PAK CAPITAL PROTECTED FUND-1
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16)
ARIF HABIB OPEN-END MUTUAL FUNDS
PAKISTAN STOCK MARKET FUND (PSM)
Pakistan Stock Market Fund (PSM) is an open-end equity fund; investing in both growth and value stocks
Pakistan. The Fund seeks to achieve long-term capital appreciation primarily from growth s
PSM is an equity fund with investment allocation between growth and value stocks, the proport
approximately 70/30 respectively. The majority 70% growth segment of the portfolio is a selection of
heavily traded stocks in the market. The remainder of the PSM is invested in ‘Value’ picks that are not tha
traded.
PAK INTERNATIONAL ELEMENT ISLAMIC FUND (PIIF)
The Pakistan International Element Islamic Fund (PIIF) is an open-end equity fund,
which is Shariah compliant, and is able to invest in Pakistan capital markets as well as
internationally markets.
Being as an Islamic equity fund, it shall invest only in Shariah compliant equity and debt
(including foreign) securities.
The bulk of the investment will be in the Pakistan capital markets, with the option of
investing a sizeable portion (upto 30%) internationally or USD 15 million whichever is
less.
Shariah Advisors:
Under the supervision of Justice (Retd) Muhammad Taqi Usmani, the Shariah Council
of the Fund will consist of:
1 Maulana Mahmood Ashraf Usmani
2 Dr. Muhammad Imran Ashraf Usmani
3 Mufti Muhammad Zahid
Types of Units:
There are following four types of units that can be purchased:
Type A Units have no redemption restrictions or back-end load and will be charged the
normal front-end load by 2%.
Type B Units have no redemption restrictions or front-end load (except for transaction
cost) but will be charged a reducing back-end load for the first 3 years (3.0% reduced
by 1.0% per year), and at the end of the 3 years of investment there is no back-end
load at all.
Type C Units shall be issued with an initial investment of Rs. 10 million with Rs. 1
million thereafter. No front-end restrictions but only a transaction cost of 0.25% will be
charged. A reducing back-end load for the first 3 years ( 3.0% reduced by 1.0% per
year), and at the end of the 3 years of investment there is no back-end load at all.
The units shall normally be registered with a Registrar who shall send an annual
statement of account (can be requested at higher frequency). Units can also be issued
in physical form as certificates at the option of the investor after paying a nominal fee.
PAKISTAN INCOME FUND (PIF)
Pakistan Income Fund (PIF) is an open-end fund, investing primarily in income
producing debt securities. The Fund seeks relatively high fixed income returns
PIF invests in a range of fixed income securities including Government of Pakistan
Bonds, corporate sector bonds (Term Finance Certificates - TFCs), reverse-repo
transactions in the money market, and spread transactions. The weightages of the
investment mix of the portfolio are managed in such a manner that reduces the risk of
loss in the market value of the investments due to any major upward movement in
interest rates in the country. Being an income fund, PIF’s emphasis is on managing
interest rate risk, and as a policy, the Fund keeps the average duration of its portfolio
less than two years.
PAKISTAN CAPITAL MARKET FUND (PCM)
Pakistan Capital Market Fund (PCM) is an open-end Fund, investing in a hybrid of
equity, debt and money market securities. Allocation depends on the opportunities
available within different asset classes.
The Fund seeks the optimum absolute return from Pakistan’s capital market.
14-November-2005 Pakistan Capital Market Fund (PCM) is the first Fund in Pakistan,
converted from a closed-end Fund to an open-end Fund. The conversion allows
investors to benefit from the full value of NAV whenever they wish to cash out.
PCM is a broader capital market Fund with investment allocation between equity, debt,
and money market instruments but does not have set allocation limits for any asset
class (with the exception of an upper limit on government securities), If a particular
asset class offers better prospects, the Fund is likely to have higher allocation in such
asset class and vice versa
METROBANK–PAKISTAN SOVEREIGN FUND (MSF)
MSF is an open-end mutual fund, which invests only in government securities, such as
Pakistan Investment Bonds (PIBs) of various maturities. MSF is a strategic alliance
between Arif Habib Investments and Habib Metropolitan Bank Limited, where the
former is fund manager and the latter is trustee and sponsor of the Fund. This is the
only fund in Pakistan, which provides investors an opportunity to invest in an underlying
portfolio of zero default risk securities. The existing portfolio of MSF consists of 5 and
10 years PIBs, with an average duration of the portfolio close to 5 years.
MSF currently has two different tranches available. One of the sub scheme is invested
in PIBs of different specific maturities. This tranche is maturing in December 2012. The
active fund management is therefore restricted to the second tranche known as
‘perpetual’. The Fund started with tranches of 2003, 2005 and 2007 maturity, which
have already matured
The Fund therefore gives investors an opportunity to choose a specific duration
depending on their view on interest rates or rely on the fund manager by investing in the
‘perpetual’. MSF focuses on paying out potentially higher net returns as against the
comparative yields available on government securities. At the same time, the perpetual
tranche of the Fund aims at protecting the value of its portfolio against any adverse
movements in interest rates.
Like other Unit Trust Schemes, most classes of investors would also achieve a high
level of tax efficiency by investing through MSF in the government securities. The
dividends paid by MSF are a taxable in the hands of the investor at the rates between
5%-10% (withheld at source). In the event an investor sells the units, the capital gain is
tax-free in most cases.
PAKISTAN PENSION FUND (PPF)
Pakistan Pension Fund (PPF) constituted under the voluntary pension system Rules
2005 is a savings cum – investment scheme with customized investment choices.
The investor has a choice between various allocation schemes, that PPF offers each of
which is invested in different proportion in the three sub funds i.e Equity; Debt and
Money market.
PAKISTAN ISLAMIC PENSION FUND (PIPF)
Pakistan Islamic Pension Fund (PIPF) constituted under the voluntary pension system
Rules 2005 is a savings cum – investment scheme with customized investment
choices in shariah compliant assets.
The investor has a choice between various allocation schemes, that PIPF offers each
of which is invested in different proportion in the three sub funds i.e Equity; Debt and
Money market.
PAKISTAN CASH MANAGEMENT FUND(PCF)
Pakistan Cash Management Fund (PCF) is an open ended fund. The fund seeks to
provide investors return with high level of liquidity coupled with extremely low credit and
price volatility, thus enabling them to manage their surplus cash efficiently
PCF seek to derive its returns by investing in a portfolio of government securities
(primarily T-Bills) and other short term debt instrument.
PAKISTAN INCOME ENHANCEMENT FUND (PIEF)
Pakistan Income Enhancement Fund (PIEF) is an open ended fund. Objective of the
fund is to provide investors an opportunity to earn a reasonable rate of return by taking
exposure primarily in debt & fixed income products and also seek enhancement in
return wherever possible, by taking limited exposure in Ready / Future transaction and
structured products both within and outside Pakistan.
PAK CAP PROTECTED FUNDFIXED INCOME SECURITIES
PCPF (FIS) is a Capital Protected Fund with an objective to provide higher total returns
as compared to other high quality fixed income investment alternates. The fund structure
allows full capital protection by repaying the entire initial investment i.e. Rs.10 per unit
(net of sales load), at the time of maturity of the Fund.
Salient Features:
Initial Investment is protected (net of sales load, if held till maturity)
Higher expected returns than traditional bank deposits.
Tax advantage as per current laws
Upside potential in Govt./Corporate Bonds’ prices in the likely decreasing interest
rates scenario
Structured for low volatility
Ability to optimize returns by trading in Government Securities and Corporate
Bonds (TFCs/Sukuks) which may be available at deep discounts in the market
Investment shall be made through 2 segments i.e., Capital Protected Segment
and Investment Segment.
a.Capital Protected Segment:
The Fund will place 81.85% as capital protected segment in a 30 month TDR with
Habib Metropolitan Bank having a Long Term credit rating of “AA+“, that will yield
a future value equivalent to the initial size of the Fund, providing 100% protection
of total initial investment (net of all expenses) to the investors.
b.Investment Segment:
This segment will be invested in Corporate Bonds of good credit quality and
Government Bonds to generate positive returns.
ARIF HABIB CLOSE-END MUTUAL FUNDS
PAKISTAN PREMIER FUND
LIMITED (PPFL)
The Pakistan Premier Fund Limited (PPFL) is a closed-end fund, mainly investing in
both value and growth stocks in Pakistan. The shares of the Fund are traded on the
stock exchanges and the Fund Manager does not have the responsibility to accept
investments and redemptions.
The Fund seeks to achieve long-term capital appreciation primarily through value
stocks.
The Fund invests mainly in equity and a small portion in debt securities such as TFCs
and preference shares. Within the equity portfolio, the allocation is distributed between
both value and growth stocks. PPFL has actively higher allocation towards the value
segment as compared to other Funds of Arif Habib Investments Limited (formerly Arif
Habib Investment Management Limited).
PAKISTAN STRATEGIC ALLOCATION FUND (PSAF)
\Composite
The Pakistan Strategic Allocation Fund (PSAF) is a closed-end scheme and its
certificates are traded on the stock exchanges. The fund mainly invests in growth
stocks with an added feature to benefit from market volatility. The fund seeks to achieve
a long-term capital appreciation and current income.
PSAF is an equity fund with investment allocation between growth and value segment
in the proportion of 85/15 respectively. The fund follows a strict discipline of investing
with constant reference to the fair value of stocks. The exposure is increased and
decreased as the market prices move away from these fair values. Allocations are
based on an exponential formula, which increases buy or sell quantities as market
prices of selected stocks move further away from their fair values.
Funds not invested as above are invested in short-term reverse repos/money market
lending.
PAKISTAN CAPITAL PROTECTED FUND-1 (PCPF-1)
PCPF-1 is a closed-end fund with a minimum capital of Rs. 200 million with an upper
limit of Rs. 3 billion.
PCPF-1 is a capital protected fund and has an objective to pay back investors their
entire initial investment i.e. Rs. 10 per Certificate over the term of its life the in the form
of dividend or return of capital on its termination. In addition, the Fund has an objective
to maximize return linked to the international capital markets.
Consistent with the objective of PCPF–1, majority of the Fund will be invested in Term
deposits with the Bank of Punjab, that will yield a future value equivalent to the initial
size of the fund, thus providing 100% capital protection. To avail opportunities for
higher returns, the remaining funds will be utilized to invest in 3-years Euro Medium
Term Note issued by Bear Stearns Companies Inc a global leader in international
capital market. The Notes performance is linked to the performance of the International
Adagio Strategy Index.
An investor who invests in this fund and holds it till maturity (three years), is guaranteed
a minimum of 100% of his/her investment amount, returned to him/her.
Under clause 62 of the Income Tax Ordinance, 2001, individuals (not companies)
receive a tax credit on investments in new shares offered to the public. The maximum
tax credit of Rs. Three Hundred thousand can be availed.
