EghtesadOnline: According to data released by Financial Information Processing of Iran, the 214 investment funds in Iran’s capital market posted an average return of -0.08% during the fourth month of the current fiscal year, Tir (June 22-July 22).
The funds’ insipid performance is actually a reflection of the market’s overall trend for the month: fluctuating wildly and ending near-flat. Certain funds investing in commodities, however, did surpass the market benchmarks in returns.
Tehran Stock Exchange’s main index TEDPIX inched down 42.1 points or 0.03% during the month to close at 108,830. Iran Fara Bourse’s benchmark index IFX dropped 20 points or 1.6% last month to stand at 1,222.
A mutual fund is an investment containing a pool of different shares of individual stocks and or bonds, which are specifically chosen by the fund manager or management team. The price of a mutual fund is set at the end of each trading day and all mutual funds have expenses, including commissions, redemption fees and operational expenses, according to Financial Tribune.
As for different types of funds, fixed-income funds had the highest average returns of about 2% for the month. Fixed-incomes, in fact, were the only funds with returns in positive territory, as diversified and equity funds posted average return of -0.89% and -1.41% respectively.
Diversified funds are the smallest of the bunch in terms of net asset value of 6.48 trillion rials ($154.3 million). Fixed-incomes are the largest as they manage 14.41 quadrillion rials ($34.3 billion) and equity funds stand in the middle with 23.93 trillion rials ($569.7 million).
The Iranian investment funds’ net asset value stood at 14.72 quadrillion rials ($35.04 billion) by the end of the month.
Rankings shift slightly if the funds’ performance is considered for the first three months of the year (March 21-July 21). Equity funds jump to the top with an average of 10.69%, followed by diversified funds with 8.86% and fixed-incomes with 7.12% in returns.
Lotus Gold Fund outperformed all other funds by a large margin, as its returns for the month stood at 22.8%. The fixed-income fund invests in gold and manages a total of 1.05 trillion rials ($25.1 million). Lotus’s high return can be attributed to Bahar Azadi gold coin’s unstoppable price rally in recent months.
Over 53.34% of Lotus’s portfolio is made up of bank deposits and the other 46.66% are invested in “other assets”, namely gold coin.
Fixed-income funds kept dominating the top list as the 225 billion-rial ($5.37-million) Zarafshan Omid Iranian posted returns reaching 20.17%. Next was Kian’s Gold Fund, with a NAV of 310 billion rials ($7.38 million) and a total monthly return of 18.36% .
Zarafshan and Kian, too, invest in gold, but through other instruments with gold as their underlying asset. Kian takes more risks as bank deposits make up 44% of its portfolio, while it’s 58% for Zarafshan.
Continuing with the month’s trend, the worst performers were among equity funds. Their top contender, Isatis Pooya Fund, hit a 3.8% return.
Bank Maskan’s Mutual Fund lost 8% of its net asset value during the month to be placed last among all funds. Yekom Saman Mutual Fund came next with 7% of losses, followed by Andishe Khobregan Saham Mutual Fund with a 6% downtick for Tir.
Last fiscal year (March 2017-18) saw Iranian funds reap 17.5% in average returns and stocks registering a 25% growth. Diversified funds had the highest return with about 21%, followed by fixed-incomes and equity funds with about 20% and 16%.
The Iranian funds’ performance this year, especially last month, clearly indicates the change in status quo and the drastic shift toward investing in commodities and safe haven assets such as gold and foreign currencies.