PIEF - A year of success - MCB-Arif Habib Savings and Investments ...

Arif Habib Investments Limited
(formerly: Arif Habib Investment Management Limited)
Aug-08
Sep-08
Oct-08
Nov-08
Dec-08
Dec-08
Jan-09
Feb-09
Mar-09
Apr-09
Management Quality Rating “AM2”
May-09
May-09
Jun-09
Jul-09
Aug-09
Dear Investor,
In recent times, invariably all asset managers begin their performance reports with a preamble of recent
challenging times by using defensive tone, try to calm their investors. It’s a different story altogether writing
about Pakistan Income Enhancement Fund (PIEF). Its’ astounding performance really justifies naming
the fund as an Income Enhancement Fund.
We would like to start with a note of thanks to our investors for showing faith & confidence in the fund
management capabilities of Arif Habib Investments by continuously increasing their investments in PIEF (in
challenging times) and they must also commend themselves for making the best investment decision for
enhancement of their income. The growth in both the Fund’s Assets under Management and Return were
made possible by many factors including continual inflows of investments when the market was offering
exceptional return enhancement opportunities and the right investment calls made by the Fund Manager,
picking the right assets at the right price and converting crisis into opportunities.
PIEF rewrote history in the fixed income funds category (inception since 2002) by earning highest
ever annualized return of 18.33% in the last financial year (FY‟09). Return since inception is 18.46%.
30.0%
20.0%
PIEF - Cumulative annualized returns comparison with industry average (income funds)
From : 28-Aug-08 To: 31-Aug-09
10.0%
0.0%
-10.0%
-20.0%
-30.0%
-40.0%
PIEF
Industry Average (income funds)
Many questions may come to reader’s mind, like; What made it happen How PIEF is different from other
income funds
We at AHI, consider open end fund as a “collective effort” of all the stake holders including the marketing
team which was able to build the investors’ confidence by talking through benefits of investing in times when
“markets are fearful” and making clients understand that accumulating good quality assets at discounted
prices lead to investor’s prime objective of making high profits with low risk.
PIEF is the only actively managed fixed income fund with a designed flexible asset allocation strategy. This
strategy was formed with a view to aggressively switch between different asset classes for enhancement in
returns without sacrificing quality of the assets. PIEF’s Fund Manager focuses on changing characteristics
of fixed income instruments and increases allocations in yield enhancing and/or yield stabilizing instruments
while constantly remaining on the lookout to reduce allocations from assets which are moving towards being
yield destroyers.
As
All investments in mutual funds are subject to market risk. The NAV based price of these
All investments in mutual funds are subject to market risk. The NAV based price of these
units and any dividends and returns thereon are dependent on forces and factors affecting
units and any dividends and returns thereon are dependent on forces and factors affecting
the capital markets. These may go up or down based on market conditions. Past
the capital markets. These may go up or down based on market conditions. Past
performance is not necessarily indicative of future results. Please read the offering
performance is not necessarily indicative of future results. Please read the offering
document to understand the investment policies and the risks involved.
document to understand the investment policies and the risks involved.
as
Arif Habib Arif Habib Investments Limited
(formerly: Arif Habib 2/1, Investment R.Y. 16, Management Old Queens Limited) Road
2/1, R.Y. 16, Old Queens Road
Karachi - 74000, Pakistan
Karachi - 74000, Pakistan
Tel: (92-21) Tel: (92-21) 111-468-378 111-468-378 (111-INVEST)
(111-INVEST)
www.arifhabib.com.pk
Email: Email: marketing@arifhabib.com.pk

Arif Habib Investments Limited
(formerly: Arif Habib Investment Management Limited)
Management Quality Rating “AM2”
During the initial period (Fund’s inception date 28 th August, 2008), PIEF enhanced its’ yield by entering into
TDR placement transactions when highest rated banks were offering exceptionally high returns. Then the
Fund became the first investor of long-term Government Bonds in the mutual fund industry at the right
moment before Bond yields started to slide translating into huge price gains on the Bonds’ portfolio. The
Fund also realized substantial income by entering into quality TFCs pertaining to Banking & Fertilizer
sectors, which were available at deep discounts to face value to secure high accrual income as well as price
gains when market returned to some sanity. PIEF was again the first fund to move into very short-term
Market Treasury Bills (MTBs) to optimize returns when Banks lowered their overnight deposit rates, while
ensuring safety and liquidity for the investors.
40.0%
PIEF - Monthly annualized returns comparison with industry average (income funds)
From: 28-Aug-08 To: 31-Aug-09
20.0%
0.0%
-20.0%
Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09
-40.0%
PIEF
Industry Average (income funds)
Transparency:
AHI at present is the only Asset Management Company in Pakistan (if not in the world) to publish Daily Fact
Sheets for all of its’ Fixed Income funds which enables savvy and educated investors and the investment
advisors to actually track Fund Manager’s investment/disinvestment decisions and compare them in the
hindsight. PIEF’s credit quality & asset allocation as on 31 st August, 2009 Fact Sheet is shown as below:
Asset Allocation (%)
T Bills
54.94
TFCs
35.97
MMP
NE Assets
2.89
2.11
Other
0.66
Cash
3.43
Credit Quality Distribution (%)
AA+
10.36
AA
11.32 AA-
15.22
AAA
54.94
A
7.50
N.R.
0.66
Collective Wisdom:
Identifying opportunities and entering into assets is not the only yield enhancing measure. There were times
when conserving cash (retaining short term liquidity, at the cost of low returns in the short-term) can create
space for making the right moves. The investment committee approach at Arif Habib Investments ensures
that there are no compulsive investments and every move is justified.
As
All investments in mutual funds are subject to market risk. The NAV based price of these
All investments in mutual funds are subject to market risk. The NAV based price of these
units and any dividends and returns thereon are dependent on forces and factors affecting
units and any dividends and returns thereon are dependent on forces and factors affecting
the capital markets. These may go up or down based on market conditions. Past
the capital markets. These may go up or down based on market conditions. Past
performance is not necessarily indicative of future results. Please read the offering
performance is not necessarily indicative of future results. Please read the offering
document to understand the investment policies and the risks involved.
document to understand the investment policies and the risks involved.
as
Arif Habib Arif Habib Investments Limited
(formerly: Arif Habib 2/1, Investment R.Y. 16, Management Old Queens Limited) Road
2/1, R.Y. 16, Old Queens Road
Karachi - 74000, Pakistan
Karachi - 74000, Pakistan
Tel: (92-21) Tel: (92-21) 111-468-378 111-468-378 (111-INVEST)
(111-INVEST)
www.arifhabib.com.pk
Email: Email: marketing@arifhabib.com.pk

Arif Habib Investments Limited
(formerly: Arif Habib Investment Management Limited)
Management Quality Rating “AM2”
Unique Selling Points (USPs):
a) Instant redemption: PIEF’s retail investors enjoy ATM card service for instant redemptions, presently
we are the only AMC to offer this service.
b) Monthly Dividends PIEF has the unique feature of monthly distribution with choice between bonus OR
cash dividend. Currently, PIEF & PCF are the only two funds distributing monthly dividends.
c) No lock-in period: Unlike Term Deposits with banks, PIEF allows daily entry & exit from the fund.
d) Liquidity: PIEF invests in both liquid and value fixed income securities (including Government, Reverse
Repo, Money Market instruments, Bank Placements both in the form of TDRs and Daily Product
Accounts, and Corporate TFCs etc.
e) Tax Efficient: Capital Gains tax exempt for individuals & Companies, DFIs and NBFCs. Commercial
Banks can avail monthly cash dividends for lesser tax implication as compared to 35% short-term CGT
f) Low Credit Risk: PIEF’s current portfolio credit quality is „AA+‟ (weighted average).
g) No Exchange Rate Risk: Currently all investments have been made in PKR denominated securities.
h) Highly Transparent: All key variables of portfolio are highlighted in the Daily Fact Sheets. Investment
decisions can be tracked on daily basis.
i) Proven Track Record: PIEF has a proven track record of delivering above average enhanced returns
(without compromising on the quality of assets) since inception.
Concluding Remarks
While managing funds or advising investors it is also important that the Fund Managers and Investment
Advisors do not fall in love with any investment instruments/fund but they need to constantly watch changing
dynamics of the instruments and the markets. There shall be justification for positioning of every instrument
in each portfolio. PIEF’s Fund Managers had the ability to stay away or sell down all of the TFCs and enter
into TDRs with banks but they chose to built portfolio of good credit quality TFCs when some of the
investment advisors were recommending staying away from this asset class without analyzing the merits
and demerits of individual instruments. PIEF’s Fund Manager opted for the highest quality instrument i.e. “T-
Bills” when investment advisors were recommending TDRs based funds offering low returns without deeply
analyzing quality and returns of this asset classes.
We will continue to introspect and analyze environment to provide value for money products to our
investors having faith in us. We will strive to continuously improve our services and products and would
welcome your valued suggestions.
Happy Investing
Adnan Siddiqui
Deputy Chief Executive
Strategy & Business Development
As
All investments in mutual funds are subject to market risk. The NAV based price of these
All investments in mutual funds are subject to market risk. The NAV based price of these
units and any dividends and returns thereon are dependent on forces and factors affecting
units and any dividends and returns thereon are dependent on forces and factors affecting
the capital markets. These may go up or down based on market conditions. Past
the capital markets. These may go up or down based on market conditions. Past
performance is not necessarily indicative of future results. Please read the offering
performance is not necessarily indicative of future results. Please read the offering
document to understand the investment policies and the risks involved.
document to understand the investment policies and the risks involved.
as
Arif Habib Arif Habib Investments Limited
(formerly: Arif Habib 2/1, Investment R.Y. 16, Management Old Queens Limited) Road
2/1, R.Y. 16, Old Queens Road
Karachi - 74000, Pakistan
Karachi - 74000, Pakistan
Tel: (92-21) Tel: (92-21) 111-468-378 111-468-378 (111-INVEST)
(111-INVEST)
www.arifhabib.com.pk
Email: Email: marketing@arifhabib.com.pk