Karachi: The ABL Islamic Sovereign Plan 1 (ABL ISP-I), managed by ABL Asset Management Company Limited, has released its unaudited financial statements for the quarter ending September 30, 2026. The fund delivered an annualized return of 7.72% during the first quarter of fiscal year 2027, falling short of its benchmark return of 10.06%.
The broader economic landscape in Pakistan during this quarter was marked by significant challenges. Elevated global oil prices led to increased domestic energy and transport costs, driving average headline inflation to 10.3% year-over-year. This figure was more than double the previous year’s average of 4.2%, with monthly inflation peaking at 11.1% in August before easing slightly in September.
Despite these inflationary pressures, the State Bank of Pakistan maintained the policy rate at 11.5%, unchanged since a 100 basis point hike in April 2026. This decision reflects the central bank's strategy to keep medium-term inflation expectations anchored within the 5-7% target range.
Large-scale manufacturing showed early signs of recovery, with a 3.03% year-over-year increase in output in July 2026. However, the recovery appeared skewed towards consumption-driven segments, while investment-heavy sectors remained sluggish, indicating a reliance on demand repair rather than capital expenditure-led growth.
Fiscal performance exceeded expectations with the Federal Board of Revenue collecting approximately Rs 3.08 trillion in the first quarter, surpassing the target of Rs 3.053 trillion. This achievement was primarily driven by stronger sales tax receipts amid rising inflation and petroleum prices.
The external account was relatively controlled, with exports totaling around US$7.25 billion over the first two months of the fiscal year, against imports of approximately US$14.0 billion, resulting in a trade deficit of about US$6.8 billion. Nonetheless, workers' remittances of US$7.3 billion provided a crucial cushion, limiting the current account deficit to US$543 million.
Market sentiment improved, bolstered by sovereign rating upgrades from S&P and Moody's, and the successful issuance of a US$3 billion Eurobond in September. These developments, coupled with ongoing support from the IMF program, have reinforced confidence in Pakistan's economic stability.
In the mutual fund industry, the open-end mutual fund sector experienced a growth of 8.12% in assets under management, with significant inflows into money market and fixed-income funds. However, equity funds saw outflows, reflecting a shift in investor preference amid the firm policy rate and elevated inflation.
According to information available from the Pakistan Stock Exchange (PSX), the ABL Islamic Sovereign Plan 1's fund size stood at PKR 105.56 million by the quarter's end, with allocations primarily in Government Guaranteed Securities and cash.
The money market during this period was characterized by rising inflation and a steady policy rate, leading to increased yields and strong participation in Ijarah Sukuk auctions. However, the Ministry of Finance maintained selective acceptance in these auctions amid robust investor demand.
Overall, the ABL Islamic Sovereign Plan 1 navigated a challenging economic environment, achieving a moderate performance relative to its benchmark. The fund's performance reflects the broader economic dynamics in Pakistan, with inflationary pressures and fiscal challenges persisting despite improvements in market sentiment and fiscal collections.