JS Securities Limited – JS Research (14-01-2021)

Karachi, January 14, 2021 (PPI-OT): Mutual Funds Update

We analyse exposure levels of Mutual Funds during Dec-2020 and highlight some key observations.

Not only are conventional funds still visibly more invested than their Islamic counterparts (over 97.1% vs. 93.0%), their exposure levels have been on a gradual but consistent increase since Oct-2020. On the other hand, while Islamic funds did increase exposures by 1.5 percentage points MoM to 93.8% during Nov-2020, these levels fell again in December by 80bps MoM in Dec-2020.

We notice that Mutual funds have remained net buyers in YTDFY21. More recently, this buying has picked up: Mutual funds have exhibited over twice the buying during MTD Jan-2021 as compared to the entire month of Dec-2020.

Upon closer inspection of NCCPL data, we find that while mutual funds continued their shift towards the Cement sector during Dec-2020, the Power sector remained their major focus. Expanding the time horizon to date, we find that mutual funds have been significant buyers in side board sectors. In MTD Jan-2020, while exposures have been built in index heavyweight sectors i.e. Banks and E and Ps, an interest in the textile sector (finally) also stands out.

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