ISLAMABAD: Money market funds are the ideal option for investors with a low-risk profile as the prevailing interest rate also encourages investors to put their money in such funds, said Abdul Sattar, Portfolio Manager at MCB-Arif Habib Savings and Investments Limited.
He was talking to WealthPK during an exclusive interview.
WealthPK: Would you further elaborate on money market funds? How is your firm faring in the prevailing economic landscape?
Abdul Sattar: Money market funds are a good choice for investors in the prevailing high interest rate regime. A decline in stock prices has created new valuations with the long long-term investors also considering turning to money market funds.
Given our competitive advantage in the digital access and online customer experience, our operations continue to run smoothly, and we are always ready to gain from the increasing number of investors available online.
The company finished its all-time high asset under management (AUM) on September 30, 2022, surpassing Rs200 billion mark. AUMs for the company increased by Rs23 billion (12.3%) to Rs210 billion from Rs187 billion on June 30, 2022, and by Rs53 billion (34%) when compared to the same period of last year.
WealthPK: What do you think of the prevailing market sentiment?
Abdul Sattar: The market sentiment has been rather dim since the unprecedented rains and the resultant flooding from July onwards devastated Pakistan’s agriculture and communication infrastructure. Of late, the simmering political tensions have taken a heavy toll on the market, overshadowing whatever goodwill generated from the successful completion of the seventh and eighth reviews of the International Monetary Fund’s loan programme and loan rollovers by the friendly countries. The recent months have also seen huge depreciation of the home currency against the US dollar. A steady decline in State Bank of Pakistan’s reserves has also dampened the investor’s mood.
WealthPK: What are the risks involved in electronic/online trading?
Abdul Sattar: The following are the risks connected to automated trading:
Competition among high-frequency traders (HFTs): Trading has become more and more expensive as a result of the competition among HFTs. As a result, some HFTs leave the market when they are unable to successfully compete.
Systemic risks: A systemic risk is a possibility that one negligent entity would cause the entire financial sector to fail. Systemic hazards, for example, could be brought on by electronic traders placing excessive orders. Failures in the electronic exchange trading system can be caused by either software or hardware malfunction.
Runaway algorithms: These are dangers brought on by erroneous programming. They cause orders that weren’t intended to be produced.
WealthPK: What is main reason behind the dwindling household income?
Abdul Sattar: Rising unemployment has caused large decreases in household incomes. While unemployment is occasionally a passing phase, for many people it represents a constant risk to their financial security, which they frequently must bear alone. There are no universally acceptable unemployment protection programmes in the country, such as unemployment insurance, governmental employment programmes, or minimum income guarantees. Many people are working in jobs that are less productive. To lead the country to the path of economic stability, the government should focus on generating employment opportunities for young people.
About the company
MCB-Arif Habib Savings and Investments Limited was incorporated in the name of Arif Habib Investment Management Limited (AHIML) on August 30, 2000 as an unquoted public limited company under the now repealed Companies Ordinance, 1984. The company is registered as a Pension Fund Manager under the Voluntary Pension System Rules, 2005, as an asset management company, and as an investment advisor under the Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003.
