NIUT catches up the lead once again!
The real spice of games lies in ups and downs, but the ultimate test resides in focusing on goals and not letting oneself suffer defeat owing to lack of efforts. Thats the conviction that the fund managers of NIUT seem to be chasing quite firmly.
To recall, National Investment Unit Trust (NIUT) has been consistently managing to lead the equity fund category since the beginning of FY14. However, in February 2014, things went a little differently as the lead was taken over by AKD Opportunity Fund (AKDOF), thus leaving NIUT on the second bench (See BR Research article: "Strategy canvas of top equity funds", published on March 5, 2014).
However, the defeat of NIUT was only short-lived as the fund has bounced back again after losing its lead as highlighted in the graph.
Speaking to BR Research about the performance of the fund, Manzoor Ahmed, NITs MD, reiterated that two crucial strategies have enabled the fund to catch up the lead once again. First, being the quality of portfolio holdings and a strong focus on fundamentally sound stocks. Second, being the long-term investment strategy as opposed to speculative trading that result in short-term gains.
However, one possible explanation of AKDOF emerging out as the leading fund in February 2014 appears to be its fund managers smart strategy of reducing equity exposure at a time when the market saw a downfall of 3.74 percent during the month. The statistics presented in the fund manager report of AKDOF portray that the equity exposure of the fund dipped to 92.3 percent in February 2014 from 96.81 percent in the preceding month. Hence, by scaling down the equity exposure when the market witnessed a downturn, AKDOF managed to take the lead for a short while.
Going onwards, equity market is expected to stay in good health. Economic rebound and increase in Pakistans weight in MSCI index suggests that fundamentally the fate of equity market is on the comforting side. Blooming equity market might lend a hand in flourishing the performance of equity funds. But, bear in mind that the fortune of equity funds depends much on the quality of underlying securities. Hence, for those looking to invest in equity minds, a quick analysis of the quality of portfolio holding will save ones neck.