Karachi: The financial report for January 2025 indicates a decline in the Net Asset Value (NAV) of the Meezan Pakistan Exchange Traded Fund (MP-ETF), despite an overall increase in net assets. As of January 31, 2025, the net assets of the MP-ETF stood at Rs. 0.26 billion, marking a significant monthly growth of 15.87% from the previous month.
The MP-ETF, launched on October 5, 2020, is a Shariah-compliant Exchange Traded Fund that aims to provide investors with the opportunity to track the performance of the Meezan Pakistan Index. This index is constituted and maintained by Al Meezan and comprises Shariah-compliant equity securities selected with a focus on market capitalization and traded value. The fund's NAV per unit decreased by 6.20% during January 2025, falling from Rs. 18.82 in December 2024 to Rs. 17.65.
According to information available from the Pakistan Stock Exchange (PSX), the MP-ETF is listed on the PSX and falls under the designated market category of Shariah Compliant Exchange Traded Fund. The fund maintains a high-risk profile and employs a backward pricing mechanism with a management fee capped at 0.5% annually. However, the actual management fee rate is currently 1.00%.
The MP-ETF's portfolio showcases a significant allocation towards equity, which comprised 97.18% of its assets in January 2025, up from 96.56% in December 2024. This increase in equity allocation is accompanied by a reduction in cash holdings, which decreased from 3.33% to 2.72% over the same period. Other receivables remained stable at approximately 0.10%.
The top equity holdings of the MP-ETF include Engro Fertilizers Limited at 13.54%, The Hub Power Company Limited at 12.48%, and Meezan Bank Limited at 10.57%. The fund also holds significant positions in Mari Energies Limited, Pakistan State Oil Company Limited, and Oil and Gas Development Company Limited, among others.
Despite the decline in NAV, the cumulative returns for the MP-ETF over various time frames remain strong. The fund reported a 59.51% return over one year and a 108.19% return over three years, with an impressive compound annual growth rate (CAGR) of 18.95%. In comparison, the benchmark Meezan Pakistan Index has consistently outperformed the MP-ETF with a CAGR of 21.38%.
The MP-ETF's performance in the fiscal year 2024 showed a return of 85.78%, slightly below the benchmark's 93.94%. Previously, the fund experienced a negative return of 1.32% in fiscal year 2023, following a decline of 23.41% in fiscal year 2022.
Investors looking to participate in the MP-ETF can benefit from its lower fee structure, access to a diversified portfolio of securities, and transparency of holdings. The ETF trades like a stock and can be bought or sold on the exchange during market hours, providing flexibility and liquidity to investors.
The investment policy of the MP-ETF ensures that the index consists of selected liquid stocks in accordance with the KMI-30 index, derived through stringent security selection criteria to achieve the investment objective. The fund manager, Ali Hassan Khan, CFA, FRM, along with a team of experienced investment committee members, continuously monitors the performance of both the fund and the benchmark index.