August 2014
Lakson Outlook Economic and Markets Review FMR Lakson Money Market Fund FMR Lakson Income Fund FMR Lakson Equity Fund FMR Lakson Asset Allocation Developed Markets Fund FMR Lakson Asset Allocation Emerging Markets Fund FMR Lakson Asset Allocation Global Commodities Fund Mutual Funds Performance Comparison Markets Information
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Economic & Markets Review - Pakistan Economic Review CPI inflation for the month of Jul'14 clocked in at 7.9% YoY, higher than the consensus expectations of ~7.6%. Deviation in inflation forecast was largely due to higher than anticipated food inflation during the month. Food inflation grew by 2.7% MoM compared to our estimate of 2.0%. On MoM basis, CPI witnessed an uptick of 1.7%, largely attributed to a hike in the prices of perishable food items (+15.7% MoM), as the Ramadan factor took the toll on the prices. The quarterly adjustment of index-heavy House Rent index (+1.8% MoM) also contributed to the increase in monthly inflation. Meanwhile, core inflation (Non-Food-Non-Energy inflation) declined to 8.3% YoY, compared to 8.7% YoY witnessed during the preceding month. On the fiscal side, the Federal Board of Revenue ("FBR") collected PKR 138 billion in Jul'14 on provisional basis against PKR 124 billion in the same period last fiscal year, reflecting a growth of over 11% YoY. The FBR surpassed its revenue target by PKR 1 billion, as the target for the month was set at PKR 137 billion. The increased taxation introduced in budget has helped the FBR in surpassing the revenue collection target in Jul'14, despite the fact that the country observed prolonged Eid holidays that reduced the effective tax accumulation during the month. The State Bank of Pakistan ("SBP") in its first monetary policy of the current fiscal year kept the discount rate unchanged at 10.0%, in-line with market expectations. The SBP, in its monetary policy statement, appreciated improving macroeconomic indicators, however flagged the importance of protecting macroeconomic gains in maintaining status quo for now. The central bank pointed towards the need for comprehensive tax reforms coupled with continued attention to the energy sector among the required fiscal reforms. On the external front, the current account posted a deficit of USD 89 million in Jun'14 against a deficit of USD 57 million during the preceding month, taking the cumulative deficit for FY14 to USD 2,925 million. The foreign exchange reserves of the country increased by USD ~200 million during the month to reach at USD 14.3 billion (as of July 25th, 2014) as the country received its fourth tranche of USD 550 million from the IMF under the EFF facility. The PKR depreciated by a nominal 0.1% to close the month at 98.8 against the greenback. Fixed-Income Market Review - July 2014 In its monetary policy announcement, the SBP kept the discount rate unchanged at 10%, in-line with market expectations. While the SBP acknowledged the improvement in various macro indicators such as the foreign exchange rate, reserves and the fiscal deficit, it emphasized upon the need for continued fiscal reforms so that the economy may be able to maintain its growth trajectory. The yields on the 6-month and 12-month T-Bills increased by 7 bps and 2 bps, respectively, while that of the 3-month T-Bill rose by a marginal 1 basis point MoM. The SBP injected an average of PKR 85.7 billion in four open market operations while mopping up PKR 55.6 billion in another three open market operations during the month. The government raised PKR 271 billion through two T-Bill auctions against a target of PKR 225 billion and maturity of PKR 190 billion. Market participation in the auctions increased in July as the bid-to-cover ratio for the two auctions came in at 1.13x (vs. 0.29x in June) with 95% of total bids made in the 3month tenor against 63% in June. Investors' interest in PIBs took a sharp decline as they placed bids of PKR 77 billion against the auction target of PKR 100 billion and maturity of PKR 145 billion, resulting in a bid-to-cover ratio of 0.8x as compared to 2.1x in the June auction. The government raised PKR 61 billion from the July PIB auction. Yields on the 3-year PIB increased 7 bps MoM while the 5-year and 10-year yields increased by 9 bps each. The M2 growth for FY14 clocked in at 12.53% vs. 15.91% in the year before, driven by much slower growth in Net Domestic Assets ("NDA") of the banking system (+9.1% vs. +20% in FY13). Net Foreign Assets ("NFA") saw a net inflow of PKR 332 billion vs. an outflow of PKR 263 billion in FY13; the turnaround in NFA was due to foreign inflows from the Eurobond, World Bank and other lenders and donors. Credit disbursement to the private sector posted an impressive recovery; rising by PKR 384 billion in FY14 compared to a net retirement of PKR 19 billion in the previous year. The 3-month and 6-month KIBOR rates remained unchanged MoM at 10.17% p.a. each at Jul-end, while the 1-year KIBOR increased 2 bps to 10.46% p.a. Equity Market Review - July 2014 The KSE-100 Index posted a gain of 2.23% during July, bringing the CY14TD return to 20%. During the month, Moody's upgraded its outlook for Pakistan from "Negative" to "Stable" while keeping its rating unchanged. This was followed by another upgrade of the outlook on the Big-5 commercial banks. The market reacted positively to these developments and the KSE100 index surged and crossed the 30,000 mark, reaching all-time highs. News flow on the macroeconomic front reaffirmed investor optimism and helped prop-up the rally to some extent. The monetary policy announcement was a non-event as the SBP kept the discount rate unchanged, reflecting the nearly unanimous expectations of market participants. Foreign investors bought USD 68.52 million worth of local equities on a net basis, bringing their CY14TD total to USD 338 million. Mutual funds remained net sellers for most of the month, however, they returned to the market as the KSE-100 Index breached the 30,000 level and, as a result, funds emerged as marginal net buyers with USD 1.87 million. Compared to other regional markets, the KSE-100 Index underperformed the Chinese and Indonesian equity markets, which posted USD-based returns of 8.0% and 6.8%, respectively, during the month, while outperforming the Indian Sensex Index (+0.5%) and the MSCI Frontier Markets Index (+1.6%). Volumes and turnover remained subdued due to the shorter trading hours that prevailed during the month of Ramadan. Thus, average daily volume fell 43% MoM to 110 million shares while average daily turnover declined by 39% MoM to PKR 5.95 billion. Some M&A activity was also witnessed as Bestway Cement acquired a 75.9% stake in Lafarge Cement, making it largest cement manufacturer in Pakistan. In terms of sector-wise performance, Oil & Gas and Electricity sectors led the market on strong foreign interest despite the re-emergence of the energy Circular Debt. Fertilizers and some Cement stocks came across as laggards due to weak fundamentals and some profit-taking.
Yield Curve
14.0% 13.0% 12.0% 11.0% 10.0% 9.0% 8.0% 1W
2M
6M
2Y
5Y
8Y
31-Jul-14
15Y
31-Aug-14
USD/PKR vs. Forex Reserves Forex Res. (USD bn.) - RHS
102.0
15.0
USD/PKR
101.0 100.0
14.0
99.0 98.0
13.0
1-Aug
8-Aug
15-Aug
22-Aug
29-Aug
Market Rates 12.8% 11.8% 10.8% 9.8% 8.8% 7.8% 6.8% 2-Jul
11-Jul
6M KIBOR
O/N Repo Rate
20-Jul 6M T-Bill
During FY14, foreign exchange reserves of the country increased by USD 2.98 billion to USD 13.99 billion, from USD 11.01 billion by end FY13, while the reserves increased by USD 6.40 billion, from a low of USD 7.58 billion in Feb'14.
DISCLAIMER: This publication is for informational purposes only and nothing herein should be construed as a solicitation, recommendation or an offer to buy or sell any fund. All investments in mutual funds are subject to market risks. The NAV based prices of units and any dividends/returns thereon are dependant on forces and factors affecting the capital markets. These may go up or down based on market conditions. Past performance is not necessarily an indication of future results.
02
Lakson Outlook - August 2014
Economic & Markets Review - International Developed Market Review The developed markets, as tracked by the MSCI World Index, posted a loss of 1.67% in July driven by fears of contagion following Argentina's default on USD 579 million worth of USDdenominated loans. US equity benchmarks have breached their all-time highs this year buoyed by a stream of positive economic data which resulted in very low volatility, suggesting that a correction was due; thus investors took the opportunity to book some gains in equities on the news of the Argentinean default. The US Federal Reserve announced yet another cut of USD 10 billion in its bond-buying program, citing the improvements witnessed in the labor market and inflation that has remained below target. US GDP growth for 2QCY14 surged at an annualized rate of 4.0%; however, this was partly due to the low-base effect of 1QCY14 GDP data. The unemployment rate for June declined to 6.1% from 6.3% in the month before, and much improved over the 7.5% rate witnessed in the same month last year. The US economy added 288k jobs in June vs. 201k jobs added in the same month last year, exceeding market expectations of 215k. The improvement in the labor market parameters pushed the Dow Jones Industrial Average past the 17,000 level, which was an all-time high. European markets were also rattled by Argentina's default; however, worries in European markets were compounded by political tensions with Russia which prompted tougher sanctions against some major Russian energy firms and banks. After cutting its key interest rate in June, the European Central Bank ("ECB") kept rates on hold in its July announcement, while announcing its commitment to using "unconventional instruments" within its mandate to ensure that inflation expectations hover around its 2% mark over the long-term. The Euro area region has been struggling with anemic GDP growth, stubbornly high unemployment rate and low inflation for the past several months. The Nikkei 225 increased 3% MoM driven by a weaker Yen and above-expected GDP growth in China, even as Japan's own latest industrial activity and retail sales data disappointed investors. Emerging Markets Review The Emerging Market Equities started FY14 on a promising note, with the index advancing by 1.4% during Jul'14. The index heavyweight China led the board, with SHSN 300 up by 8.6% during the month, as China's official manufacturing purchasing managers' index ("PMI") increased to a 27-month high of 51.7. The reading suggests that the Chinese government's recent stimulus efforts are beginning to have an impact, and the economy is on the path of stabilizing. Moreover, the sentiment improved as the latest GDP data showed that the Chinese economy had grown 7.5% in the second quarter compared to a year earlier, up from 7.3% in the first three months of the year. Along with China, the Index was stretched by gains from Brazilian and Korean Equities. Brazil's BOVESPA made strong gains during the month, up 5.0% amid signs of falling poll ratings for President Dilma Rousseff ahead of elections later this year. Rousseff's economic policies and interference in state-run companies have been blamed for Brazil's sluggish growth. Meanwhile, South Korea's KOSPI also increased 3.7% during the month, after data released confirmed that exports in July grew at their fastest annual rate in seven months. On the flip side, Russian Equities fell 6.6% during the month as the EU and US widened sanctions against Moscow for its involvement in the situation in Ukraine. The sanctions, which are the toughest since the end of the cold war, targeted the key sectors of the Russian economy-Energy, Arms and Finance. Commodities WTI prices declined in the month of July, reflecting an oversold position. We expect WTI to rebound in the month of Aug'14 as geopolitical situation is still shaky. Secondly, equities are rebounding, which is providing a strong support at this level. Brent widened its premium over WTI as tension escalated in Northern Iraq. The end-July drop in oil is deemed to be a bit too much. Gold fell 3% last month on concerns that the Federal Reserve would raise interest rates as the US economy had continuously gained traction. Nonetheless, good economic data over the next few months are likely to put the subject of interest rate hikes back on the Fed's agenda, which should reduce the relative attractiveness of gold. The US job data showed recently that employers added more than 200,000 jobs for the sixth straight month. Copper declined during the month of July because of ample supply and weak demand during summers. Copper prices fell, capping a weekly decline, as increasing inventories tracked by the Shanghai Futures Exchange signaled ample supplies. Corn futures fell to cap the biggest monthly decline since September 2011 on speculation that supplies will be ample with a bumper harvest forecast in the US, the world's top grower. Crops are maturing in mostly good condition, boosting prospects that output may reach the US Department of Agriculture's forecast of 13.86 billion bushels, the second-highest ever. Wheat prices increased in Chicago on speculation that the demand will increase for US grain after wet weather eroded the quality of some crops in Europe. Wet weather late in the growing season probably would cut quality of grain in both France and Germany, the second-biggest producers.
Performance of Equities & Commodities
140%
MSCI World Index MSCI EM Index
120%
DB Commodity Index
100%
80%
60% Aug-13
Oct-13
Dec-13 Feb-14
Apr-14
Jun-14
Valuations of International Markets 20
16
12
8
4
-
DM
US
UK
Japan Canada EM
Brazil Russia India China
P/E Multiple
The US Federal Reserve announced yet another cut of USD 10 billion in its bond-buying program, citing the improvements witnessed in the labor market and inflation that has remained below target.
DISCLAIMER: This publication is for informational purposes only and nothing herein should be construed as a solicitation, recommendation or an offer to buy or sell any fund. All investments in mutual funds are subject to market risks. The NAV based prices of units and any dividends/returns thereon are dependant on forces and factors affecting the capital markets. These may go up or down based on market conditions. Past performance is not necessarily an indication of future results.
03
Aug-14
Lakson Outlook - August 2014
Lakson Money Market Fund
MUFAPs Recommended Format
Investment Objective The investment objective of the Lakson Money Market Fund is to provide stable and competitive returns in line with the money markets, exhibiting low volatility consistent with capital preservation by constructing a liquid portfolio of low risk short term investments. Performance Review The Lakson Money Market Fund ("LMMF") generated an annualized return of 8.66% in Jul'14. The fund was able to generate this higher yield by taking advantage of the attractive rates offered by high quality institutions at the fiscal year end. However, as some of the placements made in June had matured, the allocation to COIs, TDRs and cash had decreased from 84.0% to 40.0%. As anticipated, T-Bill allocation after dropping to just 2.1% in June, jumped back up to 46.0% in July. With the fund's maturity profile evenly divided across permissible tenors, the portfolio WAM now stood at 61 days, which is slightly lower than last month's. This WAM and higher exposure to mark-to-market instruments was made keeping in view the fund's market-neutral strategy, which is fine-tuned prior to each monetary policy statement. The fund will continue to balance market exposure against higher yields in fixed placements to ensure that returns remain competitive without incurring undesirable levels of volatility. Given that inflation continued to be soft in Jul'14 (7.88% YoY) and Moody's upgraded Pakistan's outlook to Stable, we are still optimistic on a decline in the interest rates during FY15. Keeping that in perspective, the fund's investment strategy will attempt to enhance the recurring yield with potential capital gains. WWF Disclosure As of August 31, 2014 the LMMF has maintained provisions against Workers' Welfare Fund's liability to the tune of PKR 51.70 million. If the same were not made the NAV per unit of the LMMF would be higher by PKR 0.6999. If the LMMF would not have made the WWF provisions during FY15, the year to date annualized return of the LMMF for FY15 would be higher by 0.69%. For details investors are advised to read the Note 8.1 of the latest Financial Statements (Nine Monthly Report as of March 31, 2014) of the LMMF.
Asset Allocation
TDRs 31%
T-Bills 42%
Credit Split
AA 39%
Govt Sec/AAA 42%
LOPs/COI 27%
AA+ 19%
Asset Allocation Instruments Treasury Bills (T-Bills) Pakistan Investment Bonds (PIBs) Placements with Banks (TDRs) Placements with DFIs (COI & LOPs) Cash
Jun-14 Jul-14 Aug-14 % of Total Assets 2% 46% 42% 14% 14% 0% 27% 8% 31% 19% 27% 27% 39% 5% 0%
WAM* Days 50 0 81 36 0
* Weighted Average Maturity
Fund Facts Fund Type Category Net Assets (PKR Mil.) NAV (31.08.2014) Pricing Mechanism Trustee Auditor Management Fee
Front End Load Back End Load Launch Date Benchmark
Dealing Days Cut-Off Time Fund Rating Risk Profile Asset Manager Rating
Open-End Money Market Fund 7,571 101.5552 Previous Day CDC Pakistan Limited KPMG Taseer Hadi & Co. "10% of Gross Earnings subject to a minimum of 1.00% and maximum of 1.25% of the average annual net assets" None None November 13, 2009 50% Average 3M T?bills yield + 50% Average 3M TDR rate of minimum AA rated banks. Mon - Fri 4:00 PM 'AA' by PACRA Low Risk AM3+
Performance Morningstar FY15 - YTD August-14 2 Months 3 Months 6 Months 12 Months CY14 - YTD
LMMF 8.84% 8.67% 8.84% 8.79% 8.64% 8.18% 8.64%
Benchmark 9.27% 9.64% 9.27% 9.40% 9.17% 8.76% 9.24%
Simple Annualized FY15 - YTD August-14 2 Months 3 Months 6 Months 12 Months CY14 - YTD
LMMF 8.53% 8.35% 8.53% 8.52% 8.46% 8.18% 8.52%
Benchmark 8.94% 8.94% 9.08% 8.97% 8.76% 8.94% 9.10%
Please note that the benchmark of the fund was changed in February 2014. Benchmark calculation of tenors which include months prior to February 2014 incorporate the old benchmark as well.
LMMF vs. Benchmark 118 115 112 109
Non Compliant Investments Name of Non - Compliant Investment
Pak Brunei Investment Company Ltd.
Type of Instrument
106
Value of Total Value of % of Net Investment Provisioning Investment Assets before Held after Provisioning Provisioning
Certificate of Investment 790,000,000
Disclosures Leverage as on August 31, 2014 Non Performing Assets WAM of Portfolio
Nil. Nil. 56
-
790,000,000
10.4%
103 100 Jun-12
Oct-12
Feb-13
Jun-13
Benchmark
Oct-13
Feb-14
Jun-14
LMMF
Investment Committee Babar Ali Lakhani Khurram Schehzad Mustafa O. Pasha, CFA Saifullah Kazmi Farhan Bashir Syed Imran Raza Kazmi Maryam Hidayatallah
Chairman
DISCLAIMER: This publication is for informational purposes only and nothing herein should be construed as a solicitation, recommendation or an offer to buy or sell any fund. All investments in mutual funds are subject to market risks. The NAV based prices of units and any dividends/returns thereon are dependant on forces and factors affecting the capital markets. These may go up or down based on market conditions. Past performance is not necessarily an indication of future results.
04
Lakson Outlook - August 2014
Lakson Income Fund
MUFAPs Recommended Format
Investment Objective The investment objective of the Lakson Income Fund is to provide competitive total return through investment in a diversified portfolio of fixed income securities. Investments will be made in a variegated mix of short term, medium term and longer term maturities depending on the assessment by the Investment Team of interest rate trends and prospective returns. Performance Review The Lakson Income Fund ("LIF") generated an annualized return of 8.94% in Jul'14, compared to the Benchmark return (average return of all income funds) of 8.97%. The LIF underperformed the average income fund by 3 bps. However, during the first seven months of the calendar year 2014, the fund has managed to outperform the Benchmark by 11 bps and generate a competitive return of 9.41%. Asset allocation changed with cash holdings decreasing to 8.8% while exposure to T-Bills (21.2%) and PIBs (46.0%) increased significantly. Exposure to corporate debt in the form of TFCs and Sukuks, decreased to 17.1%, as the fund size jumped by almost 31.0% to PKR1,406 million. However, portfolio WAM remained stable and was recorded at 715 days in July. Going forward, the fund will look to increase PIB exposure and look at alternative investments, such as MTS and ready-future contracts, which are providing attractive risk-adjusted yields. This strategy will allow the fund to continue performing and benefit from any monetary easing in 1HFY15. WWF Disclosure As of August 31, 2014 the LIF has maintained provisions against Workers' Welfare Fund's liability to the tune of PKR 10.59 million. If the same were not made the NAV per unit of the LIF would be higher by PKR 0.7601. If the LIF would not have made the WWF provisions during FY15, the year to date annualized return of the LIF for FY15 would be higher by 0.88%. For details investors are advised to read the Note 9.1 of the latest Financial Statements (Nine Monthly Report as of March 31, 2014) of the LIF.
Asset Allocation
TFCs 14%
Cash 1% LOPs/COI MTS 11% 1% Sukuks 3%
Credit Split AA13%
T-Bills 28%
Unrated 1%
A+ 3%
AA 4% AA+ 9% AAA 70%
PIBs 42%
TFCs Portfolio Name of the Issuer Name of the Issuer Bank Al Habib Limited IV Bank Al Falah Limited V PMCL VII Askari Bank Limited IV K-ELECTRIC AZM SUKUK III
Issue Date Issue Date 30-Jun-11 20-Feb-13 18-Apr-12 23-Dec-11 24-Feb-14
Rating % of Total Assets Rating % of Total Assets AA 1.61% AA4.61% AA2.91% AA5.21% A+ 2.91%
Fund Facts Fund Type Category Net Assets (PKR Mil.) NAV (31.08.2014) Pricing Mechanism Trustee Auditor Management Fee Front End Load Back End Load Launch Date Benchmark
Dealing Days Cut-Off Time Fund Rating Risk Profile Asset Manager Rating
Open-End Income Fund 1,419 101.8945 Forward Day CDC Pakistan Limited KPMG Taseer Hadi & Co. 1.50% 1.50% None November 13, 2009 Average of returns earned by the Income Funds in the industry Mon - Fri 4:00 PM 'A+' by PACRA Medium Risk AM3+
Performance Morningstar FY15 - YTD August-14 2 Months 3 Months 6 Months 12 Months CY14 - YTD
LIF 10.56% 11.82% 10.56% 9.34% 9.23% 9.06% 9.88%
Benchmark 9.83% 9.59% 9.83% 9.39% 8.89% 9.61% 9.35%
Simple annualized FY15 - YTD August-14 2 Months 3 Months 6 Months 12 Months CY14 - YTD
LIF 10.13% 11.22% 10.13% 9.02% 9.03% 9.06% 9.72%
Benchmark 9.25% 9.42% 9.23% 9.45% 9.17% 8.89% 9.21%
LIF vs. Benchmark 118 115 112 109 106
Asset Allocation Instruments Treasury Bills (T-Bills) Pakistan Investment Bonds (PIBs) Placements with DFIs (LOPs & COI) Term Finance Certificates (TFCs) Sukuks MTS Cash
103
Jun-14
Jul-14
0% 31% 8% 19% 4% 0% 37%
% of Total Assets 21% 46% 6% 14% 3% 0% 9%
* Weighted Average Maturity
Disclosures Leverage as on August 31, 2014 Non Performing Assets WAM of Portfolio
Nil. Nil. 777 Days
Aug-14
WAM*
28% 41% 11% 14% 3% 2% 1%
Days 48 985 9 2132 1638 36 1
100 Jun-12
Oct-12
Feb-13
Jun-13
Benchmark
Oct-13
Feb-14
Jun-14
LIF
Investment Committee Babar Ali Lakhani Khurram Schehzad Mustafa O. Pasha, CFA Saifullah Kazmi Farhan Bashir Syed Imran Raza Kazmi Maryam Hidayatallah
Chairman
DISCLAIMER: This publication is for informational purposes only and nothing herein should be construed as a solicitation, recommendation or an offer to buy or sell any fund. All investments in mutual funds are subject to market risks. The NAV based prices of units and any dividends/returns thereon are dependant on forces and factors affecting the capital markets. These may go up or down based on market conditions. Past performance is not necessarily an indication of future results.
05
Lakson Outlook - August 2014
Lakson Equity Fund
MUFAPs Recommended Format
Investment Objective The investment objective of the Lakson Equity Fund is to provide long term capital appreciation by investing mainly in equity and related listed securities. Investments will be made in companies of substance, financial strength and demonstrably superior management skills with some exposure given to smaller capitalized value stocks. Performance Review The Lakson Equity Fund ("LEF") increased by 3.04% in Jul'14 compared to the benchmark KSE-30 Index return of 3.26% for the month of July, 2014. The LEF slightly underperformed the benchmark KSE-30 Index by 22 bps during the month of July. With this, the Fund has provided a cumulative return of 150.3% since its inception. During the month, the LEF increased exposure in equities to 83% compared to 81% at the start of the month. The LEF increased exposure in Commercial Banks, Oil & Gas and Pharmaceutical & Bio Tech while decreased exposure in Construction & Material and Chemicals (Fertilizer). Presently, the Fund is trading at a P/E multiple of 8.6x with an average dividend yield of 4.5%. Looking ahead, LEF aims to capture the best fundamental value at the lowest prices. The fund will focus its energy in increasing exposure in key sectors, where the upcoming result season and MPS announcement are expected to generate the most interest. WWF Disclosure As of August 31, 2014 the LEF has maintained provisions against Workers' Welfare Fund's liability to the tune of PKR 8.42 million. If the same were not made the NAV per unit of the LEF would be higher by PKR 0.9255. If the LEF would not have made the WWF provisions during FY15, the year to date return of the LEF for FY15 would be higher by 0.88%. For details investors are advised to read the Note 8.1 of the latest Financial Statements (Nine Monthly Report as of March 31, 2014) of the LEF.
Top 10 Holdings (In Alphabetical Order) Bank Alfalah Limited Engro Corporation Limited Faysal Bank Limited Habib Bank Limited The Hub Power Company Mari Petroleum Company Oil & Gas Development Co Pakistan Petroleum Limited Pakistan State Oil United Bank Limited
Sectorwise Exposure
Jul-14
Aug-14
Oil & Gas Const. & Mat. Commercial Banks Chemicals Pharma & Bio Tech Others
28.69% 11.98% 22.65% 10.13% 4.42% 5.53%
29.83% 0.00% 28.19% 10.90% 4.45% 8.21%
Equities Government Securities (T-Bills) Cash & Equivalents Others
Fixed Income 16%
Cash 1%
Performance FY15 - YTD August-14 2 Months 3 Months 6 Months 12 Months CY14 - YTD
Others 2%
Equity 81%
KSE-30 -2.64% -5.71% -2.64% -2.33% 5.99% 15.23% 5.68%
KSE-100
Others
LEF vs. Benchmark
Pharma & Bio Tech Oil & Gas
Chemicals
210 190 170
Commercial Banks
150
Jun-14 81% 0% 9% 9%
Index KSE-100 BSE Sensex 30 FTSE KLCI DFM General DJIA S&P 500
* Source: Reuters, Bloomberg
Disclosures Leverage as on August 31, 2014 Non Performing Assets
LEF -2.80% -5.67% -2.80% -3.35% 5.23% 21.93% 7.31%
Sectorwise Exposure
Jul-14 83% 0% 15% 2%
Aug-14 82% 16% 1% 2%
130 110 90 Jun-12
Pakistan vs. Global Markets Country Pakistan India Malaysia Dubai USA USA
Open-End Equity Fund 933 102.4922 Forward Day CDC Pakistan Limited BDO Ebrahim & Co. 3.00% 3.00% None November 13, 2009 KSE-30 Index Mon-Fri 4:00 PM High Risk AM3+
Asset Allocation 5.84% 7.34% 4.87% 8.21% 5.09% 7.97% 7.85% 7.94% 6.07% 9.28%
Asset Allocation (% of Total Assets)
Fund Facts
Fund Type Category Net Assets (PKR Mil.) NAV (31.08.2014) Pricing Mechanism Trustee Auditor Management Fee Front End Load Back End Load Launch Date Benchmark Dealing Days Cut-Off Time Risk Profile Asset Manager Rating
Nil. Nil.
1M Return -5.76% 2.87% -0.28% 4.75% 3.23% 3.77%
P/E 7.96 17.01 16.96 18.35 15.12 16.78
Div. Yield 5.90% 1.57% 3.10% 2.07% 2.26% 1.96%
Oct-12
LEF
Feb-13
Jun-13
Oct-13
Feb-14
KSE-100
Jun-14
KSE-30
Investment Committee Babar Ali Lakhani Khurram Schehzad Mustafa O. Pasha, CFA Saifullah Kazmi Farhan Bashir Syed Imran Raza Kazmi Maryam Hidayatallah
Chairman
DISCLAIMER: This publication is for informational purposes only and nothing herein should be construed as a solicitation, recommendation or an offer to buy or sell any fund. All investments in mutual funds are subject to market risks. The NAV based prices of units and any dividends/returns thereon are dependant on forces and factors affecting the capital markets. These may go up or down based on market conditions. Past performance is not necessarily an indication of future results.
06
Lakson Outlook - August 2014
Lakson Asset Allocation Global Commodities Fund
MUFAPs Recommended Format
Investment Objective The investment objective of the Lakson Asset Allocation Global Commodities Fund is to provide longterm capital appreciation by investing in a mix of domestic debt and commodities. Performance Review The Lakson Asset Allocation Global Commodities Fund ("LAAGCF") increased by 0.41% in Jul'14 against the decrease in the Benchmark (70% 6-month T-Bills + 30% DBLC - OY Balanced Index) of 0.55% during the month. The LAAGCF outperformed the Benchmark by 97 bps. The LAAGCF has appreciated by 14.61% since its inception. As of July 31, 2014, the Fund has exposure in Foreign Currency Deposits (USD), while it is not holding any exposure in the Commodities ETF currently due to uncertain outlook on the Commodities keeping in view the global developments. WWF Disclosure As of August 30, 2014 the LAAGCF has maintained provisions against Workers' Welfare Fund's liability to the tune of PKR 0.90 million. If the same were not made the NAV per unit of the LAAGCF would be higher by PKR 0.4217. If the LAAGCF would not have made the WWF provisions during FY15, the year to date return of the LAAGCF for FY15 would be higher by 0.45%. For details investors are advised to read the Note 8.1 of the latest Financial Statements (Nine Monthly Report as of March 31, 2014) of the LAAGCF.
Global Commodities (DB Balanced Commodity ETF) Weight as of Jun-14 13.61% 8.57% 8.41% 8.33% 8.24% 7.23% 7.07% 7.03% 6.33% 6.03% 5.91% 3.65% 3.25% 2.23% 2.10%
Cash 27%
Fund Performance Government Securities (T-Bills) 73%
Government Securities (T-Bills) Global Commodities Foreign Currency Deposit (USD) Placements with Banks (TDRs) Cash
1.45% 1.04% 1.45% 1.86% 1.41% 3.72% 2.21% 15.80%
0.59% 1.17% 0.59% 1.65% 1.42% 3.96% 3.16% 21.63%
* The new Benchmark is effective from September 10, 2013.
Precious Metals 16.85%
Jun-14 37.20% 26.35% 19.60% 16.85%
Base Metals 19.60%
LAAGCF vs. Benchmark 115
Energy 37.20%
113 111 109 107 105
Agriculture 26.35%
103 101
Nil. Nil.
Jun-14
Apr-14
Feb-14
Oct-13
Dec-13
Jun-13
Benchmark
Aug-13
Apr-13
Feb-13
Oct-12
99
Dec-12
Jun-14 Jul-14 Aug-14 % of Total Assets 0% 67% 73% 0% 0% 0% 25% 27% 0% 0% 0% 0% 75% 7% 27%
Disclosures Leverage as on August 31, 2014 Non Performing Assets
FY15-YTD August-14 2 Month 3 Month 6 Month 12 Months CY14-YTD Since Inception
Benchmark*
LAAGCF
Sectorwise Exposure
Asset Allocation Instruments
Open-End Asset Allocation Fund 219 101.685 Forward Day CDC Pakistan Limited BDO Ebrahim & Co. 1.25% 2.50% None October 10, 2011 Benchmark performance of the LAAGCF is calculated through a 30:70 combination of DBLC - OY Balanced Index and 6month T-Bills. Dealing Days Mon - Fri Cut-Off Time 04:00 PM Risk Profile Medium Risk Asset Manager Rating AM3+
Jun-12
Sectorwise Exposure as of Energy Agriculture Base Metals Precious Metals
Asset Allocation
Fund Type Category Net Assets (PKR Mil.) NAV (31.08.2014) Pricing Mechanism Trustee Auditor Management Fee Front End Load Back End Load Launch Date Benchmark
Aug-12
Commodity Gold WTI Crude Oil Brent Crude Oil RBOB Gasoline Heating Oil Zinc Sugar Soybeans Aluminium Copper Corn Natural Gas Silver Wheat (Kansas) Minneapolis Wheat
Fund Facts
LAAGCF
Investment Committee Babar Ali Lakhani Khurram Schehzad Mustafa O. Pasha, CFA Saifullah Kazmi Farhan Bashir Syed Imran Raza Kazmi Maryam Hidayatallah
Chairman
DISCLAIMER: This publication is for informational purposes only and nothing herein should be construed as a solicitation, recommendation or an offer to buy or sell any fund. All investments in mutual funds are subject to market risks. The NAV based prices of units and any dividends/returns thereon are dependant on forces and factors affecting the capital markets. These may go up or down based on market conditions. Past performance is not necessarily an indication of future results.
07
Lakson Outlook - August 2014
Lakson Asset Allocation Developed Markets Fund Investment Objective The investment objective of the Lakson Asset Allocation Developed Markets Fund is to provide longterm capital appreciation by investing in a mix of domestic debt and developed markets securities. Performance Review The Lakson Asset Allocation Developed Markets Fund ("LAADMF") decreased by 0.10% in Jul'14 compared to the Benchmark (70% 6-month T-Bills + 30% MSCI World Index) increase of 0.12%. The LAADMF's underperformance vis-à-vis the Benchmark only reflected the expense ratio to the tune of 21 bps. The LAADMF has appreciated by 28.82% since its inception. Developed Markets were also up during Jul'14 as the benchmark MSCI World Index decreased by 1.67% during the month. The LAADMF's international exposure is in iShares MSCI World ETF, which tracks the performance of the MSCI World Index. WWF Disclosure As of August 30, 2014 the LAADMF has maintained provisions against Workers' Welfare Fund's liability to the tune of PKR 2.57 million. If the same were not made the NAV per unit of the LAADMF would be higher by PKR 0.4586. If the LAADMF would not have made the WWF provisions during FY15, the year to date return of the LAADMF for FY15 would be higher by 0.43%. For details investors are advised to read the Note 8.1 of the latest Financial Statements (Nine Monthly Report as of March 31, 2014) of the LAADMF.
Developed Markets Equities (iShares MSCI World ETF)
Asset Allocation
As of Aug-14
Apple Inc Exxon Mobil Corp Microsoft Corp Johnson & Johnson General Electric Wells Fargo & Co Cheveron Corp Nestle SA JP Morgan Chase & Co. Procter and Gamble
1.83% 1.29% 1.07% 0.87% 0.80% 0.76% 0.75% 0.74% 0.67% 0.66%
Cash 2.03% DM Equities 30% T-Bills 63% PIBs 5%
MUFAPs Recommended Format
Fund Facts Fund Type Category Net Assets (PKR Mil.) NAV (31.08.2014) Pricing Mechanism Trustee Auditor Management Fee Front End Load Back End Load Launch Date Benchmark
Open-End Asset Allocation Fund 602 108.4179 Forward Day CDC Pakistan Limited BDO Ebrahim & Co. 2.00% 2.50% None October 10, 2011 Benchmark performance of the LAADMF is calculated through a 30:70 combination of MSCI World Index and 6-month T-Bills. Dealing Days Mon - Fri Cut-Off Time 04:00 PM Risk Profile Medium Risk Asset Manager Rating AM3+
Fund Performance
LAADMF Benchmark
FY15-YTD August-14 2 Month 3 Month 6 Month 12 Months CY14-YTD Since Inception
1.60% 1.70% 1.60% 2.90% 2.76% 8.65% 3.61% 31.01%
2.17% 2.08% 2.17% 3.26% 3.84% 11.38% 5.13% 43.51%
LAADMF vs. Benchmark
Country United States Japan United Kingdom Switzerland Canada
Weight 54.66% 8.13% 7.42% 4.26% 4.22%
Sectors Financials Information Technology Health Care Consumer Discretionary Industrials
Disclosures Leverage as on August 31, 2014 Non Performing Assets
Nil. Nil.
Weight 20.45% 12.79% 12.08% 11.75% 11.04%
Benchmark
Jun-14
Apr-14
Feb-14
Oct-13
Dec-13
Jun-13
Aug-13
Apr-13
Feb-13
MSCI World Index Composition (As of Jul-14)
Oct-12
Jun-12
Government Securities (T-Bills & PIBs) Developed Markets (DM) Equities Placements with Banks (TDRs) Cash
Jun-14 Jul-14 Aug-14 % of Total Assets 0% 63% 67% 30% 30% 31% 0% 0% 0% 70% 2% 1%
Dec-12
Asset Allocation Instruments
Aug-12
133 131 129 127 125 123 121 119 117 115 113 111 109 107 105 103 101 99
LAADMF
Investment Committee Babar Ali Lakhani Khurram Schehzad Mustafa O. Pasha, CFA Saifullah Kazmi Farhan Bashir Syed Imran Raza Kazmi Maryam Hidayatallah
Chairman
DISCLAIMER: This publication is for informational purposes only and nothing herein should be construed as a solicitation, recommendation or an offer to buy or sell any fund. All investments in mutual funds are subject to market risks. The NAV based prices of units and any dividends/returns thereon are dependant on forces and factors affecting the capital markets. These may go up or down based on market conditions. Past performance is not necessarily an indication of future results.
08
Lakson Outlook - August 2014
Lakson Asset Allocation Emerging Markets Fund
MUFAPs Recommended Format
Investment Objective The investment objective of the Lakson Asset Allocation Emerging Markets Fund is to provide longterm capital appreciation by investing in a mix of domestic debt and emerging market securities. Performance Review The Lakson Asset Allocation Emerging Markets Fund ("LAAEMF") was up 0.70% in Jul'14 against the Benchmark (70% 6-month T-Bills + 30% MSCI Emerging Markets Index) increase of 1.05%. The LAAEMF's underperformance vis-à-vis the Benchmark only reflected the expense ratio to the tune of 35 bps. The LAAEMF has appreciated by 20.03% since its inception. The Fund's international exposure is in iShares MSCI Emerging Markets ETF, which tracks the performance of the MSCI Emerging Markets Index. Emerging markets equities increased in Jul'14 as the benchmark MSCI Emerging Markets Index increased by 1.43% during the month. WWF Disclosure As of August 30, 2014 the LAAEMF has maintained provisions against Workers' Welfare Fund's liability to the tune of PKR 0.91 million. If the same were not made the NAV per unit of the LAAEMF would be higher by PKR 0.5676. If the LAAEMF would not have made the WWF provisions during FY15, the year to date return of the LAAEMF for FY15 would be higher by 0.54%. For details investors are advised to read the Note 8.1 of the latest Financial Statements (Nine Monthly Report as of March 31, 2014) of the LAAEMF.
Emerging Market Equities (iShare MSCI EM ETF)
Security
Cash 6%
3.35% 2.05%
China Mobile Ltd
1.58%
China Construction Bank Corp
1.32%
Naspers Ltd
1.22%
Industrial Commercial Bank of China
1.20%
Itau Unibanco Holdings
1.04%
Gazprom OAO
1.02%
Hon Hai Precision Industry
0.99%
Dealing Days Cut-Off Time Risk Profile Asset Manager Rating
Fund Performance
Taiwan Semiconductor Manufacturing Co Ltd 2.43% Tencent Holdings Ltd.
Open-End Asset Allocation Fund 176 107.268 Forward Day CDC Pakistan Limited BDO Ebrahim & Co. 2.00% 2.50% None October 10, 2011 Benchmark performance of the LAAEMF is calculated through a 30:70 combination of MSCI Emerging Markets Index and 6-month TBills. Mon - Fri 04:00 PM Medium Risk AM3+
Asset Allocation
As of Jul-14 % of ETF Assts
Samsung Electronics Co Ltd
Fund Facts Fund Type Category Net Assets (PKR Mil.) NAV (31.08.2014) Pricing Mechanism Trustee Auditor Management Fee Front End Load Back End Load Launch Date Benchmark
EM Equities 32%
T-Bills 57%
PIBs 5%
LAAEMF Benchmark
FY15-YTD August-14 2 Month 3 Month 6 Month 12 Months CY14-YTD Since Inception
2.81% 2.09% 2.81% 3.84% 5.05% 8.41% 3.74% 22.55%
3.17% 2.10% 3.17% 4.47% 6.22% 11.40% 6.06% 33.01%
LAAEMF vs. Benchmark
Asset Allocation Instruments Government Securities (T-Bills) Emerging Markets (EM) Equities Placements with Banks (TDRs) Cash
123
Jun-14 Jul-14 Aug-14 % of Total Assets 0% 57% 59% 32% 32% 32% 0% 0% 0% 68% 6% 9%
121 119 117 115 113 111 109 107 105 103 101
EEM Composition (As of Aug - 14)
Disclosures Leverage as on August 31, 2014 Non Performing Assets
Nil. Nil.
Benchmark
Jun-14
Apr-14
Feb-14
Oct-13
Dec-13
Jun-13
Aug-13
Apr-13
Feb-13
Oct-12
Weight 27.52% 16.71% 10.50% 9.26% 8.30%
Dec-12
Sectors Financials Information Technology Energy Consumer Discretionary Materials
Jun-12
Weight 14.47% 15.16% 11.91% 11.84% 7.49%
Aug-12
Country China South Korea Taiwan Brazil South Africa
99
LAAEMF
Investment Committee Babar Ali Lakhani Khurram Schehzad Mustafa O. Pasha, CFA Saifullah Kazmi Farhan Bashir Syed Imran Raza Kazmi Maryam Hidayatallah
Chairman
DISCLAIMER: This publication is for informational purposes only and nothing herein should be construed as a solicitation, recommendation or an offer to buy or sell any fund. All investments in mutual funds are subject to market risks. The NAV based prices of units and any dividends/returns thereon are dependant on forces and factors affecting the capital markets. These may go up or down based on market conditions. Past performance is not necessarily an indication of future results.
09
Lakson Outlook - August 2014
Disclaimer This information has been prepared by Lakson Investments for your general information and private use only. It does not constitute investment advice and is not intended to be an offer to buy or sell or a solicitation of an offer to buy or sell any securities mentioned. It should not be considered as an incentive to invest. The securities described in this document may not be eligible for sale or subscription in all jurisdictions or to certain categories of investors. This document is not intended for distribution to a person or within a jurisdiction where such distribution would be restricted or illegal. This document may not be conveyed to or used by a third party without our express consent. Any other use is not authorized. The information contained herein has been obtained from sources believed to be reliable and no member of Lakson Investments makes any warranty, expressed or implied, as to the accuracy or completeness of the information. All the information included in this presentation is current when this document is prepared and subject to changes at any time. Any forecast or projection or forward looking statement made in this document is not necessarily indicative of future or likely performance, future events or future financial performance of securities, countries, markets or companies. Such statements are only predictions and actual events or results may differ. Lakson Investments may from time to time provide services to the companies and their affiliates mentioned herein. Employees of Lakson Investments or ersons/entities connected to them may from time to time have position in or are holding any of the securities mentioned in this document. No consideration have been given to and no investigation was made of your investment objectives, financial situation or particulars, and accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of you acting on such information or opinion or estimate. Lakson Investments expressly disclaims any fiduciary responsibility or liability for any consequences, financial or otherwise arising from any reliance placed on this information in this document. Disclaimer: All investments in mutual funds are subject to market risks. The NAV of Units may go up or down based on market conditions. Past performance is not necessarily indicative of the future results. The investors are advised in their own interest to carefully read the Offering Document in particular the investment policy in Clause 2.2 and risk disclosure and warning statements contained in Clause 2.11 and Part 11 respectively in this Offering Document.
Transaction Locations: Islamabad: Contact Person: Mr. Ali Kazmi - Branch Manager Office No.6, Mezzanine floor, Kashmir Plaza, Jinnah Avenue, Blue Area, Islamabad. UAN: 051.111-111-717 Fax: 051.2870228 Lahore: Contact Person: Mr.Tassawar - Branch Manager 14 Ali Block, 1st Floor New Garden Town, Lahore. Tel: 042.591.1025/26 Rawalpindi: Contact Person: Mr. Tariq Aziz - Branch Manager Suite No.3, 1 st Floor, Majeed Plaza Bank Road, Rawalpindi Tel: 051.551.2251/52 Fax: 051.511.0996 Faisalabad: Contact Person: Mr. Shahbaz Choudhry - Branch Manager 1 st Floor, FM Plaza 15-D, Peoples Colony, Faisalabad Tel: 041.324.1704/07 Fax: 041.855.4453 Sialkot: Contact Person: Mr. Nisar Bhatti - Branch Manager 1 st Floor, Karim Plaza Iqbal Town, Defence Road, Sialkot Tel: 052.324.1704/07 Fax: 052.324.1703
10
Lakson Outlook - August 2014
1954
DECADES OF SEASONED INVESTMENT
Century Insurance
Merit Packaging Limited
Century Paper & Board Mills
Hassan Ali Karabhai Foundation
Lakson Investments Limited. Lakson Square, Building No. 2, Sarwar Shaheed Road, Karachi-74200, Pakistan
UAN T F E
+92.21 111 Lakson +92.21 3569.8000 +92.21 3568.1653
[email protected] www.li.com.pk
