Alfalah GHP Cash Fund (AGCF)
Alfalah GHP Cash Fund is a money market fund which aims at protecting investor capital and providing liquidity through an investment structure by placing significant percentage of the funds in high quality and short tenor avenues such as cash in daily deposit accounts, short dated Government securities, money market placements or any other SECP permissible instrument(s) that AGIM feels would be appropriate to optimize returns. Such investments will only be with those Financial Institutions having minimum long term investment grade rating of AA.
Investment
Objectives
The primary investment objective of the fund is to provide a regular stream of income at competitive rate of return while preserving capital to the extent possible by investing in assets with low risk and a high degree of liquidity from a portfolio constituted of mostly money market securities and placements.
Key Features:
Key features of the Alfalah GHP Cash Fund are:
- Capital Protection: The prime objective of the Fund is preservation of capital invested.
- Return Optimization: The Fund seeks to optimize returns for investors. The product provides the investor with a return superior to daily and short tenor bank deposits.
- Investments in quality assets: The minimum credit quality restriction for placing the funds is AAA in case of NBFCs and Modarabas and AA in case of Banks and DFIs, therefore increasing quality of the portfolio.
- Experienced Management: The experienced and dedicated management team at Alfalah GHP possesses strong fund management expertise which can add value to long term returns of the Fund. The key advantages of investment in AGCF are as follows:
- Competitive Yield: The fund may potentially yield superior tax efficient returns than bank saving deposits of the same tenor.
- Tax Benefit: Capital gains on the units, as well as bonus units are exempted from tax upto June 2010. Cash dividends are taxed at a maximum of 10% depending on the type of investor.
- Diversification: AGCF will provide investors exposure to a diversified portfolio of money market instruments and placements, thus reducing the investors' overall portfolio risk.
- Tax Credit: Individual investors of AGCF shall be entitled to a tax credit (provided investment in mutual fund is kept for a minimum of 1 year) under Section 62 of the Income Tax Ordinance, 2001, on purchase of new Units. The amount on which tax credit will be allowed shall be lower of (a) amount invested in purchase of new Units, (b) 10% of the taxable income of the Unit Holder, and (c) Rs. 300,000 (Rupees Three hundred thousand), and will be calculated by applying the average rate of tax of the unit holder for the tax year. If the Units so acquired are disposed within 12 months, the amount of tax payable for the tax
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Risk Control in the Investment Process
Investment process requires disciplined risk management. AGCF will incorporate adequate safeguards for controlling risks in the portfolio construction process. The risk control process involves reducing risks through optimal portfolio diversification. AGCF believes that this diversification would help achieve the desired level of consistency in returns.
Characteristics of Units
Currently Alfalah GHP Cash Fund offers following types of units
- Growth Units (entitled to Bonus Units in case of any distribution by the Fund)
- Income Units (entitled to Cash Dividend in case of any distribution by the Fund)
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Growth Units : Growth Units are meant for those Unit Holders who want to receive Bonus Units only at the time of any interim and annual distribution announcements made by the Management Company on behalf of the Fund from time to time. However, the Unit Holder(s) will have the option at the time of investment or subsequently to en - cash bonus units at Ex - NAV for the relevant distribution period
Income Units: Income Units are meant for those Unit Holders who want to receive Cash Dividend only at the time of any interim and annual distribution announcements made by the Management Company on behalf of the Fund from time to time. However, the unit holders can reinvest their cash dividend on the basis of the ex - NAV at the Distribution Date.
Minimum Investment:
Growth Units
Initial Investment PKR 25,000
Subsequent Reinvestments PKR 5,000
Income Units
Initial Investment PKR 100,000
Subsequent Reinvestments PKR 50,000
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Distribution Policy
The Fund on a monthly basis (except for last month of the financial year) shall distribute as cash dividend and/or bonus units. Net income (after deducting all the expenses of the fund) earned up to 26th of each month may be distributed by the management company. By distributing on a monthly basis the management company would ensure that total distribution in an Accounting period accumulates to an amount that is required under the tax laws and other regulations in force to be distributed and that may be beneficial for its Unit Holders .
For determining the dividend entitlements the 26th of each month shall be treated as a Cutoff Date for receiving investment, redemption and conversion forms. However if in any given month 26th is not a Business day, the last business day prior to 26th of the month would be treated as a Cutoff date for that month.
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