Karachi: Meezan Islamic Income Fund (MIIF), an open-end mutual fund under the Income Fund category, has significantly outperformed its benchmark with a robust 20.94% return for the fiscal year ended June 30, 2024, compared to the benchmark's 10.10%. The fund's strategic investment in Shariah-compliant instruments has been pivotal in achieving these results.

The fund's strategy emphasizes investing in a mix of corporate and sovereign Sukuk, Musharaka and Murabaha instruments, and other Islamic income products. According to information available from the Pakistan Stock Exchange (PSX), MIIF's approach this year has focused on maximizing yields through proactive asset reallocation within the constraints of risk management. This strategy was particularly effective in an environment of rising interest rates, with conservative placements in Term Deposits and Bai Muajjal.

Despite challenges, including six non-performing Sukuks from companies like Eden Housing Limited and Hascol Petroleum Limited, MIIF managed to maintain substantial returns. Provisions were fully made for most non-performing investments, with ongoing court contests and negotiations reflecting a proactive approach to asset recovery.

The asset allocation for FY24 shows a dominant investment in Islamic Sukuk and Ijarah, comprising 66% of the fund's portfolio, with the remaining 34% in Islamic bank deposits and other receivables. This allocation supported a gross income of Rs. 2,757 million for the year, predominantly from Sukuk profits totaling Rs. 1,970 million and Islamic savings accounts contributing Rs. 820 million. Despite a realized loss of Rs. 44 million on Sukuk sales, the fund achieved an unrealized appreciation of Rs. 10 million.

Net income after all provisions and expenses stood at Rs. 2,555 million. The fund's net assets increased by 39% from the previous year, reaching Rs. 15,980 million. The net asset value per unit rose slightly to Rs. 51.9209 from Rs. 51.6491.

In terms of distributions, MIIF declared a cash dividend of Rs. 10.52 per unit, totaling Rs. 1,336 million distributed among investors during the fiscal year. The fund's performance and strategic asset management have earned it a Stability Rating of A+(f) from VIS Credit Rating Company.

The fund's investor base also expanded, totaling 26,079 unit holders by the end of FY24, demonstrating broad investor confidence and the fund's appeal in the Islamic financial market.