Karachi: Meezan Cash Fund (MCF), a leading open-end cash fund focusing on Shariah-compliant money market and Islamic bonds, has significantly outperformed its benchmarks in the fiscal year ended June 30, 2024, achieving a net return of 21.22%, nearly double the return rates of Six Month deposits at Islamic Banks.
The fund, which adheres strictly to Shariah principles, seeks to maximize capital preservation and provide a reasonable rate of return by investing in liquid, high-quality, short-term debt securities. According to its investment policy, MCF invests only in instruments with a minimum credit rating of 'Double A' and limits the maturity of these instruments to six months, with a portfolio average maturity capped at three months.
According to information available from the Pakistan Stock Exchange (PSX), Meezan Cash Fund's performance review for the year shows a substantial improvement in net asset value, rising from Rs. 51.02 per unit at the beginning of the fiscal year to Rs. 51.28 by June 30, 2024. This growth represents a net outperformance of 10.94% over the benchmark, which is the average deposit rate of three AA-rated Islamic banks.
The fund's asset allocation has remained robust, with a significant portion placed in Sukuks and bank deposits. The net assets of MCF increased by a staggering 178% year-over-year, reaching Rs. 71,892 million, driven by a gross income of Rs. 8,403 million, primarily from bank deposits and Sukuks. After accounting for expenses totaling Rs. 484 million, the fund's net income stood at Rs. 7,919 million.
During the fiscal year, Meezan Cash Fund also distributed Rs. 2,866 million in cash dividends, equivalent to Rs. 10.54 per unit, marking a distribution rate of 21.08%. The fund's stability is further underscored by a credit rating of AA+(f) assigned by VIS Credit Rating Company.
The fund's broad appeal is evident in its diverse investor base, with total unit holders reaching 46,524 as of June 30, 2024, distributed across various unit ranges from small individual investors to large institutional holders.