June 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 Jun'14 clocked in at 8.2% YoY, lower than the consensus expectations of ~8.5%. Deviation between inflation forecast and the actual figure was largely due to lowerthan-anticipated food inflation during the month. Food inflation clocked in at 7.4% compared to our estimate of 7.9%. On MoM basis, CPI witnessed an uptick of 0.6%, largely attributed to a hike in the prices of cigarettes (+16%), on the back of an increase in the Federal Excise Duty during the recent budget. Meanwhile, core inflation (Non-Food-Non-Energy inflation) stayed flat at 8.7% during the month, after increasing for three consecutive months. Average inflation for the FY14 clocked in at 8.62%, which is well within the SBP's revised target of 9-10% for FY14. After the completion of first fiscal year with impressive revenue growth and controlled expenditure, the government announced Federal Budget FY15 with an aim to continue the reform process and expedite development process. The government has aimed to enhance the GDP growth to 5.1% for FY15, while inflation target has been set at 8.0%. In addition, the government is targeting to contain fiscal deficit at 4.9% of GDP in FY15, down from 5.8% estimated in FY14, with the help of an ambitious 24% YoY growth in tax revenue while only 8% YoY increase in current expenditures. The government aims to meet the revenue target by withdrawing concessions/exemptions and increasing documentation of the economy. On the external front, the current account posted a deficit of USD 147 million in May'14 against a deficit of USD 111 million during the preceding month, taking the cumulative deficit for 11MFY14 to USD 2,577 million. The foreign exchange reserves of the country increased by a massive USD ~800 million to reach at USD 13.99 billion (as of June 27th, 2014) as the SBP received inflows from multilateral and bilateral sources amounting to USD 258 million, including USD 230 million from the World Bank and over USD 300 million on account of the privatization proceeds from UBL transaction. PKR depreciated by a nominal O.02% to close the month at 98.7 against the greenback. 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. Fixed-Income Market Review The sovereign yield curve steepened during the month of Jun'14. Yield on the 3, 5 and 10 year bonds increased by 6, 3 and 6 basis points ("bps"), respectively. Yield on the 6-month and 12month T-Bills also increased by 2 and 4 bps while that of the 3-month T-Bill fell by a marginal 1 basis point. The SBP injected an average of PKR 66.47 billion in three open market operations while mopping up an average PKR 40.8 billion in another three open market operations during the month. The government raised PKR 140 billion through two T-Bill auctions against a target of PKR 450 billion and maturity of PKR 307 billion. Market participation in the auctions decreased in June as the bid-to-cover ratio for the two auctions came in at 0.29x (vs. 0.53x in May) with 63% of total bids made in the 3-month tenor against 26% in May. Investors remained highly interested in PIBs and placed bids of PKR 211 billion against the auction target of PKR 100 billion and maturity of only PKR 2.11 billion, resulting in a bid-tocover ratio of 2.1x as compared to 2.4x in the May auction. The government raised PKR 212 billion from the June PIB auction. The government rekindled the dormant Ijarah Sukuk market by conducting an auction with a target of PKR 49.5 billion, which prompted an enthusiastic response from the market and allowed the government to raise PKR 49.54 billion at 200 bps below the latest 6-month weighted average T-Bill yield, which translated to 7.98% p.a. The M2 growth as of 20th June 2014 came in at 9.51% compared to 12.66% in the same period last year. Net Domestic Assets ("NDA") of the banking system increased by 5.94% since June-end, whereas Net Foreign Assets ("NFA") surged by 124% during the same period due to significant foreign inflows received this year. Credit disbursement to the private sector posted an impressive recovery; rising by PKR 294 billion compared to a net retirement of PKR 1.8 billion during the corresponding period of FY13. The 6-month KIBOR remained unchanged MoM at 10.17% p.a. at June-end, while the 3-month KIBOR fell 1 basis point to 10.17% p.a. Equity Market Review The KSE100 index posted a marginal decline of 0.29% during Jun'14, bringing the CY14TD return to 17.38%. The year FY14 turned out to be another stellar year for the equity market, as the KSE100 Index posted a gain of 41% (FY13: +49%) as the transition to a new, businessfriendly government, financial support from the IMF, and major inflows from foreign sources bolstered market expectations of an economic revival. In the fiscal budget FY15, the government announced that the duration of the capital gains tax ("CGT") would be increased from 12 months to 24 months, in lieu of which concession was granted on the rate of CGT, which was raised to 12.5%, from a potential 17.5%. Additionally, 5% tax on issuance of bonus share was also announced. The secondary public offerings ("SPOs") of UBL and PPL received a very positive response from foreign and local investors, and allowed the government to raise a total of USD 542 million from the two transactions by the government. Foreign investors bought USD 71.45 million worth of local equities on a net basis during the month of June, bringing their total CY14TD inflows to USD 270 million. Mutual funds hastened their selling spree, offloading USD 50 million (net) during the month, which was 74% more than the amount sold in the month before. Investors' participation in the market improved as average daily turnover in the market increased by 31% MoM to PKR 8.26 billion, while average volumes increased by 22% MoM to 137 million shares. Compared to other regional markets, the KSE100 Index underperformed Indian and Chinese equity markets, which posted USD-based returns of 3.6% and 1.1%, respectively, during the month. In terms of sector-wise performance, Oil & Gas sector outperformed the market as investors recognized attractive valuations on offer in the sector. Meanwhile, the laggards comprised a mixed bunch of stocks whose fundamental outlook remained somewhat bleak. Going forward, the market will take directions from result season, which will kick off late July.
Yield Curve
13.0% 12.0% 11.0% 10.0% 9.0% 8.0% 1W
2M
6M
2Y
5Y
8Y
31-May-14
15Y 30-Jun-14
USD/PKR vs. Forex Reserves Forex Res. (USD bn.) - RHS USD/PKR
99.0
14.5
98.0 13.5
97.0
12.5 1-Jun
8-Jun
15-Jun
22-Jun
29-Jun
Market Rates 12.8% 11.8% 10.8% 9.8% 8.8% 7.8% 6.8% 4-Jun
13-Jun
6M KIBOR
22-Jun
O/N Repo Rate
1-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 - June 2014
Economic & Markets Review - International Developed Market Review The developed markets, as tracked by the MSCI World Index, posted a gain of 1.65% in June driven by the US and Japanese markets while European markets posted a monthly loss. 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. The unemployment rate for May stood unchanged MoM at 6.3%, although much improved over the 7.5% rate witnessed in the same month last year. The US economy added 217k jobs in May vs. 199k jobs added in the same month last year, which slightly exceeded market expectations. The European Central Bank ("ECB") reduced its key interest rate by 10 bps to a record low of 0.15% in June, finally succumbing to concerns regarding deflation, an economic weakness in the 18-country Euro zone. According to Eurostat's flash estimate, Euro area annual inflation was 0.5% in May 2014, after recording 0.7% in April, which was lower than expected. Going forward, Euro area inflation is expected to remain at low levels in the coming months, before it is expected to gradually increase during 2015 and 2016, thereby underpinning the case for the ECB's decisions. The labor market has shown an improvement in May 2014 as unemployment rate for the region came in at 11.6% vs. 12.0% in the same month last year. Japanese industrial output expanded by a seasonally adjusted 0.5% MoM in May (missing the expectation of 0.9% MoM increase), after declining 2.8% MoM in April. In addition, consumer price index in Japan increased in line with the forecast by 3.7% YoY in May (highest increase since 1982), after increasing 3.4% YoY in April. Expectations of rising inflation in Japan have been driven by the Bank of Japan's intent to expand its monetary base in order to stimulate growth and investment in the Japanese economy. Thus, despite a stronger Yen, the Japanese equity benchmark increase by 3.6% MoM, adding to the gain in developed markets. Emerging Markets Review The Emerging Market Equities ended the FY14 on a high note, with the MSCI Emerging Market Index advancing 2.2% during the month of Jun'14, taking the cumulative gains for FY14 to 11.7%. Although the index-heavy China posted a nominal gain of 0.4%, the Index was stretched by gains from Indian and Brazilian equities. The BSE Sensex-30 of India surged by 4.9% during the month on optimism that the new government's reforms would revive the Indian economy. Brazil's BOVESPA also gained 3.8% during the month, supported by a poll showing declining support for President Dilma Rousseff ahead of the elections later in the year. A weaker currency and hopes for a pick-up in Chinese export demand also boosted demand for Brazilian shares. The HSBC flash purchasing managers' index for China jumped from 49.4 in May, to 50.8 in June, beating forecasts and ending a five-month period of contraction (a number above 50 indicates growth). Although the better-than-expected manufacturing data raised hopes that economic growth is stabilizing, it also led to speculation that further broad-based stimulus measures from the policymakers would be reduced. South Korea's KOSPI was up 0.4% during the month. Sentiment was boosted by the central bank's latest monthly survey, which showed that consumer confidence rebounded in June following a sharp decline in May. However, industrial output contracted the most in over five years in May, adding to signs that the economic recovery may be losing steam. Commodities The DBC Commodity Index increased by 1.6% during June as commodities such as oil and gold showed an upward trend during the month. WTI increased 3.3% during Jun'14 as fighters from the Islamic State in Iraq and the Levant captured the northern city of Mosul and advanced south toward Baghdad. Iraq pumped 3.3 million barrels a day of crude last month, trailing only Saudi Arabia in the Organization of Petroleum Exporting Countries ("OPEC"). Iraq's crude exports will accelerate next month. WTI increased because of the risk that fighting could still spread south of Iraq. Oil prices increased during the month as tension in Iraq escalated while the US stockpiles were also decreasing, especially the crude inventories at Cushing Oklahoma. Gold increased during the month of June by 6.2% as tension in Iraq aggravated, which enhanced the appeal of gold as a safe heaven. Moreover, physical demand from China is supporting the gold prices to some extent. The US Fed said it will probably leave interest rates the same, and are not going to do anything in the near term. If interest rates stay low, it would be good for the gold prices. However, as the US economy is improving, the US Fed continued to taper off the stimulus program by a further USD 10 billion to USD 35 billion, fifth time in a row. Copper increased during the month of Jun'14 as demand from the world largest consumer of Copper, China, remained robust. Among the agricultural commodities, wheat decreased by 9.7% as its stock piles increased on better output. Corn decreased during the month of Jun'14 by 7% as supplies exceeded demand.
Performance of Equities & Commodities
140%
MSCI World Index MSCI EM Index DB Commodity Index
120%
100%
80%
60% Jun-13
Aug-13
Oct-13
Dec-13
Feb-14
Apr-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
Jun-14
Lakson Outlook - June 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 8.08% in Jun'14. In order to take advantage of yields available at the fiscal year end, the fund has concentrated exposure in placements and cash balances with high quality banks and DFIs. As a result, 84.0% of the fund was invested in TDRs, COIs and daily product accounts, as opposed to 22.0% last month. The other consequence of this change in asset allocation was reduced exposure of T-Bills to just 2.1% in June compared to 65.0% in May. Also affected was the fund's weighted average maturity which dropped significantly from 70 days in May, to 33.5 days in June. The fund's current portfolio should allow it to generate a consistent and competitive return with minimal daily volatility as instruments with markto-market exposure only comprised 15.8% of net assets. Given that inflation remained muted in Jun'14 (8.22% YoY) and FX reserves have continued their spectacular rise (USD14.26bn as of 20th June 2014), we do expect that monetary easing will commence in 1HFY15. Therefore, the fund's WAM will accordingly increase in the coming months in order to take advantage of any drop in interest rates. WWF Disclosure As of June 30, 2014 the LMMF has maintained provisions against Workers' Welfare Fund's liability to the tune of PKR 50.61 million. If the same were not made the NAV per unit of the LMMF would be higher by PKR 0.6765. If the LMMF would not have made the WWF provisions during FY14, the year to date annualized return of the LMMF for FY14 would be higher by 0.18%. 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 T-Bills 2%
Credit Split
PIB 14%
AA 36%
Cash 38%
Govt Sec/AAA 53%
LOPs/COI 19%
AA+ 11%
TDRs 27%
Asset Allocation Instruments Treasury Bills (T-Bills) Pakistan Investment Bonds (PIBs) Placements with Banks (TDRs) Placements with DFIs (COI & LOPs) Cash
Apr-14 May-14 Jun-14 % of Total Assets 56% 65% 2% 12% 13% 14% 19% 12% 27% 15% 10% 19% -1% 0% 39%
WAM* Days 136 79 57 46 1
* Weighted Average Maturity
Fund Facts Fund Type Category Net Assets (PKR Mil.) NAV (30.06.2014) 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 7,490 100.104 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 FY14 - YTD June-14 2 Months 3 Months 6 Months 12 Months CY14 - YTD
LMMF 7.90% 8.39% 8.62% 8.62% 8.57% 7.90% 8.57%
Benchmark 8.50% 9.47% 9.27% 9.31% 9.20% 8.50% 9.20%
Simple Annualized FY14 - YTD June-14 2 Months 3 Months 6 Months 12 Months CY14 - YTD
LMMF 7.90% 8.08% 8.33% 8.35% 8.39% 7.90% 8.39%
Benchmark 8.50% 9.08% 8.96% 8.97% 9.00% 8.50% 9.00%
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 June 30, 2014 Non Performing Assets WAM of Portfolio
Nil. Nil. 34 Days
-
790,000,000
10.6%
103 100 Jun-12
Sep-12
Dec-12
Mar-13
Jun-13
Benchmark
Sep-13
Dec-13
Mar-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 - June 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 6.53% in Jun'14, compared to the Benchmark return (average return of all income funds) of 9.90%. The LIF underperformed the average income fund by 337 bps. However, during the first half of the calendar year 2014, the fund has managed to outperform the benchmark by 12 bps and generated a competitive return of 9.42% while the fiscal year return of 8.38% beat the Benchmark by 7bps. In order to take advantage of year end yields and ensure that fund liquidity was not compromised, exposure to T-Bills and TFCs was reduced while cash holdings jumped from 10.0% in May, to over 37.0% in June. Despite this, the credit quality of the fund remained strong with almost 60% of net assets rated AAA/Sovereign. COI and PIB allocation increased slightly to 8.4% and 30.9%, respectively, as the fund size decreased by 9.8% in June. Fund's WAM also went up slightly to 706 days. Going forward, the fund will attempt to strike a balance between liquidity and yield in the context of a declining interest rate environment. WWF Disclosure As of June 30, 2014 the LIF has maintained provisions against Workers' Welfare Fund's liability to the tune of PKR 10.36 million. If the same were not made the NAV per unit of the LIF would be higher by PKR 0.9648. If the LIF would not have made the WWF provisions during FY14, the year to date annualized return of the LIF for FY14 would be higher by 0.19%. 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
Credit Split A+ 4%
PIBs 31%
Cash 38%
AA23% AAA 61%
AA 2%
LOPs/COI 8% Sukuks 4%
AA+ 10%
TFCs 19%
TFCs Portfolio 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 30-Jun-11 20-Feb-13 18-Apr-12 23-Dec-11 24-Feb-14
Rating % of Total Assets AA 2.08% AA6.12% AA4.26% AA6.64% A+ 3.74%
Fund Facts Fund Type Category Net Assets (PKR Mil.) NAV (30.06.2014) 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 1,075 100.1714 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 FY14 - YTD June-14 2 Months 3 Months 6 Months 12 Months CY14 - YTD
LIF 8.38% 6.73% 5.09% 6.00% 9.65% 8.38% 9.65%
Benchmark 8.31% 10.36% 11.29% 7.76% 9.52% 8.31% 9.52%
Simple annualized FY14 - YTD June-14 2 Months 3 Months 6 Months 12 Months CY14 - YTD
LIF 8.38% 6.53% 4.99% 5.87% 9.42% 8.38% 9.42%
Benchmark 8.31% 9.90% 10.79% 7.52% 9.30% 8.31% 9.30%
LIF vs. Benchmark 118 115 112 109 106
Asset Allocation Instruments Treasury Bills (T-Bills) Pakistan Investment Bonds (PIBs) Placements with Banks (TDRs) Placements with DFIs (LOPs & COI) Term Finance Certificates (TFCs) Sukuks Cash
Apr-14
May-14
26% 25% 0% 10% 26% 11% 2%
% of Total Assets 33% 28% 0% 8% 18% 3% 10%
* Weighted Average Maturity
Disclosures Leverage as on June 30, 2014 Non Performing Assets WAM of Portfolio
Nil. Nil. 706 Days
Jun-14
WAM*
0% 31% 0% 8% 19% 4% 37%
Days 1 766 1 74 2153 1700 1
103 100 Jun-12
Sep-12 Dec-12 Mar-13
Jun-13
Benchmark
Sep-13 Dec-13 Mar-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 - June 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") decreased by 0.56% in Jun'14 compared to the benchmark KSE-30 Index return of 0.31% for the month of June, 2014. The LEF underperformed the benchmark KSE30 Index by 88 bps during the month of June. With this, the Fund has provided a cumulative return of 142.9% since its inception. During the month, the LEF decreased exposure in equities to 81% compared to 83% at the start of the month. The LEF decreased exposure in Chemicals (Fertilizer), Construction & Material and Pharma & Bio Tech while increased exposure in Oil & Gas and Banks. Presently, the Fund is trading at a P/E multiple of 7.6x with an average dividend yield of 4.3%. 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 June 30, 2014 the LEF has maintained provisions against Workers' Welfare Fund's liability to the tune of PKR 7.87 million. If the same were not made the NAV per unit of the LEF would be higher by PKR 0.8642. If the LEF would not have made the WWF provisions during FY14, the year to date return of the LEF for FY14 would be higher by 0.89%. 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) 4.64% 6.99% 6.92% 3.62% 4.79% 4.72% 8.07% 6.90% 6.66% 6.77%
Sectorwise Exposure
May-14
Jun-14
25.72% 14.50% 19.14% 11.78% 6.30% 5.07%
28.54% 13.07% 19.39% 10.87% 4.29% 5.23%
Asset Allocation (% of Total Assets) Equities Advance agsinst Subscription of Shares Government Securities (T-Bills) Cash & Equivalents
Open-End Equity Fund 960 105.4434 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
Bank Alfalah Limited D.G. Khan Cement Company Engro Corporation Limited Faysal Bank Limited Kohat Cement Company Mari Petroleum Company Oil and Gas Development Company Pakistan Petroleum Limited Pakistan State Oil United Bank Limited
Oil & Gas Const. & Mat. Commercial Banks Chemicals Pharma & Bio Tech Others
Fund Facts
Fund Type Category Net Assets (PKR Mil.) NAV (30.06.2014) 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
T-Bills 9%
Cash & Equi. 9%
Performance
Equities 82%
FY14 - YTD June-14 2 Months 3 Months 6 Months 12 Months CY14 - YTD
LEF
KSE-30
KSE-100
32.15% -0.56% 1.84% 5.29% 22.81% 32.15% 10.40%
25.96% 0.31% 1.32% 6.49% 17.49% 25.96% 8.54%
41.16% -0.29% 2.56% 9.18% 30.19% 41.16% 17.38%
Sectorwise Exposure Others Pharma & Bio Tech
LEF vs. Benchmark
Chemicals
Oil & Gas
190
Commercial Banks
170
Const. & Mat.
Apr-14 88% 0% 9% 4%
May-14 83% 0% 10% 8%
210
150 130
Jun-14 81% 0% 9% 9%
110 90 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 LEF
KSE-100
KSE-30
Pakistan vs. Global Markets Country Pakistan India Malaysia Dubai USA USA
Index KSE-100 BSE Sensex 30 FTSE KLCI DFM General DJIA S&P 500
* Source: Reuters, Bloomberg
Disclosures Leverage as on June 30, 2014 Non Performing Assets
Nil. Nil.
1M Return -0.29% 4.94% 0.50% -22.50% 0.65% 1.91%
P/E 11.31 17.99 16.84 15.83 15.74 17.95
Div. Yield 5.04% 1.59% 3.06% 2.80% 2.27% 1.99%
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 - June 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 0.40% in Jun'14 against the increase in the Benchmark (70% 6-month T-Bills + 30% DBLC - OY Balanced Index) of 1.06% during the month. The LAAGCF underperformed the Benchmark by 66 bps. The LAAGCF has appreciated by 14.14% since its inception. As of June 30, 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 June 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 0.2543. If the LAAGCF would not have made the WWF provisions during FY14, the year to date return of the LAAGCF for FY14 would be higher by 0.09%. 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) Commodity Gold Light Crude RBOB Gasoline Brent Crude Heating Oil Soybeans Sugar #11 Corn Zinc Aluminium Copper - Grade A Natural Gas Silver Wheat (Kansas Wheat) Wheat-Mineapolis Wht
Weight as of May-14 13.50% 8.72% 8.45% 8.38% 8.11% 7.23% 7.06% 6.58% 6.55% 5.80% 5.73% 4.03% 3.22% 2.34% 2.22%
Sectorwise Exposure as of Energy Agriculture Base Metals Precious Metals
Asset Allocation USD Deposit 25%
Government Securities (T-Bills) Global Commodities Foreign Currency Deposit (USD) Placements with Banks (TDRs) Cash
Cash 75%
Open-End Asset Allocation Fund 354 100.1987 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+
Fund Performance
LAAGCF
Benchmark*
4.24% 0.40% 0.84% 1.26% 0.74% 4.24% 0.74% 14.14%
7.47% 1.06% 1.10% 2.13% 2.55% 7.47% 2.55% 21.06%
* The new Benchmark is effective from September 10, 2013.
Sectorwise Exposure Precious Metals 16.72%
May-14 37.69% 27.43% 18.08% 16.72%
Base Metals 18.08%
LAAGCF vs. Benchmark 113
Energy 37.69%
111 109 107 105
Agriculture 27.43%
Apr-14 May-14 Jun-14 % of Total Assets 70% 69% 0% 0% 0% 0% 30% 27% 25% 0% 0% 0% 0% 4% 75%
Disclosures Leverage as on June 30, 2014 Non Performing Assets
Fund Type Category Net Assets (PKR Mil.) NAV (30.06.2014) Pricing Mechanism Trustee Auditor Management Fee Front End Load Back End Load Launch Date Benchmark
FY14 - YTD June-14 2 Months 3 Months 6 Months 12 Months CY14 - YTD Since Inception
Asset Allocation Instruments
Fund Facts
Nil. Nil.
103 101 99 Jun-12
Sep-12
Dec-12
Mar-13
Benchmark
Jun-13
Sep-13
Dec-13
Mar-14
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 - June 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") increased by 1.28% in Jun'14 compared to the Benchmark (70% 6-month T-Bills + 30% MSCI World Index) increase of 1.08%. The LAADMF outperformed the Benchmark by 20 bps. The LAADMF has appreciated by 28.95% since its inception. Developed Markets were also up during Jun'14 as the benchmark MSCI World Index increased by 1.65% 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 June 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 FY14, the year to date return of the LAADMF for FY14 would be higher by 0.20%. 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)
Apple Inc Exxon Mobil Corp Microsoft Corp Johnson & Johnson General Electric Wells Fargo & Co Nestle SA Cheveron Corp JP Morgan Chase & Co. Procter and Gamble
Asset Allocation
As of Jun-14
1.72% 1.28% 0.97% 0.86% 0.77% 0.72% 0.76% 0.71% 0.61% 0.62%
DM Equities 30%
Cash 69.68%
MUFAPs Recommended Format
Fund Facts Fund Type Category Net Assets (PKR Mil.) NAV (30.06.2014) Pricing Mechanism Trustee Auditor Management Fee Front End Load Back End Load Launch Date Benchmark
Open-End Asset Allocation Fund 598 106.6908 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 FY14 - YTD June-14 2 Months 3 Months 6 Months 12 Months CY14 - YTD Since Inception
LAADMF Benchmark 9.64% 1.28% 2.27% 2.89% 1.98% 9.64% 1.98% 28.95%
12.94% 1.08% 2.21% 3.16% 2.98% 12.94% 2.98% 40.62%
LAADMF vs. Benchmark 127 125 123 121 119 117 115 113 111 109 107 105 103 101 99
Asset Allocation Instruments
Apr-14 May-14 Jun-14 % of Total Assets 67% 66% 0% 31% 31% 30% 0% 0% 0% 1% 4% 70%
Government Securities (T-Bills) Developed Markets (DM) Equities Placements with Banks (TDRs) Cash
Jun-12
MSCI World Index Composition (As of Apr-14) Country United States Japan United Kingdom Canada Switzerland
Weight 53.68% 8.25% 7.67% 4.10% 4.09%
Dec-12
Mar-13
Jun-13
Benchmark
Sectors Financials Information Technology Consumer Discretionary Industrials Health Care
Disclosures Leverage as on June 30, 2014 Non Performing Assets
Sep-12
Nil. Nil.
Weight 20.55% 12.33% 11.86% 10.84% 10.42%
Sep-13
Dec-13
Mar-14
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 - June 2014
Lakson Asset Allocation Emerging Markets Fund 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 1.00% in Jun'14 against the the Benchmark (70% 6-month T-Bills + 30% MSCI Emerging Markets Index) increase of 1.26%. The LAAEMF underperformed the Benchmark by 26 bps during the month. The LAAEMF has appreciated by 19.20% 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 Jun'14 as the benchmark MSCI Emerging Markets Index increased by 2.25% during the month. WWF Disclosure As of June 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 0.4683. If the LAAEMF would not have made the WWF provisions during FY14, the year to date return of the LAAEMF for FY14 would be higher by 0.14%. 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
MUFAPs Recommended Format
Fund Facts Fund Type Category Net Assets (PKR Mil.) NAV (30.06.2014) Pricing Mechanism Trustee Auditor Management Fee Front End Load Back End Load Launch Date Benchmark
Open-End Asset Allocation Fund 167 104.3227 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+
Dealing Days Cut-Off Time Risk Profile Asset Manager Rating
Asset Allocation
As of May-14 % of ETF Assts
Samsung Electronics Co Ltd
3.50%
EM Equities 32%
Taiwan Semiconductor Manufacturing Co Ltd 2.65% Tencent Holdings Ltd.
1.97%
China Mobile Ltd
1.44%
China Construction Bank Corp
1.26%
Gazprom OAO
1.26%
Naspers Ltd
1.19%
Industrial Commercial Bank of China
1.14%
Itau Unibanco Holdings
0.96%
Hon Hai Precision Industry
0.93%
Cash 68%
Fund Performance
LAAEMF Benchmark
FY14 - YTD June-14 2 Months 3 Months 6 Months 12 Months CY14 - YTD Since Inception
6.40% 1.00% 2.18% 2.71% 0.91% 6.40% 0.91% 19.20%
10.01% 1.26% 2.89% 3.61% 2.93% 10.01% 2.93% 29.19%
LAAEMF vs. Benchmark
Asset Allocation Instruments Government Securities (T-Bills) Emerging Markets (EM) Equities Placements with Banks (TDRs) Cash
117
Apr-14 May-14 Jun-14 % of Total Assets 67% 65% 0% 31% 28% 32% 0% 0% 0% 2% 6% 68%
115 113 111 109 107 105 103 101
EEM Composition (As of Apr - 14) Country China South Korea Taiwan Brazil South Africa
Weight 17.36% 15.43% 12.16% 10.61% 7.44%
99
Sectors Financials Information Technology Energy Consumer Discretionary Materials
Disclosures Leverage as on June 30, 2014 Non Performing Assets
Nil. Nil.
Weight 26.46% 17.48% 10.45% 9.02% 8.81%
Jun-12
Sep-12
Dec-12
Mar-13
Benchmark
Jun-13
Sep-13
Dec-13
Mar-14
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 - June 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 - June 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
