MCB-Arif Habib (MCBAH) Savings and Investments Limited, a subsidiary of MCB Bank Limited, has launched the Pakistan Sarmaya Mehfooz Fund (PAKSMF), a new capital-protected open ended collective investment scheme (CIS) with an investment term of two years.
Pakistan Sarmaya Mehfooz Fund will invest in stocks with a maximum ceiling of 50%, and the rest will be invested in Pakistan Investment Bonds (PIBs) and bank deposits.
Arif Abrar, business head, wealth management at MCB Bank Ltd, said that MCB Wealth Management’s strategic alliance with MCB-Arif Habib Savings has created lot of value for the bank.
“Our client retention has really improved by adding investment products to our product menu,” he said. “High net worth and return conscious clients can increase their wealth as well as achieve tax efficiency through these products.”
MCBAH said it has developed an in-house quantitative model for capital protection rather than completely relying on Constant Proportion Portfolio Insurance (CPPI) to manage the fund investments over the two years term of the scheme. However, the fund will also deploy a CPPI methodology as a guiding tool for monitoring bond floor event on a daily basis.
MCBAH said that equities and government securities will be used to enhance potential returns while term deposits placed with ‘AA-‘rated commercial banks will provide yield stability.
“Equity exposure will not be dramatically increased or decreased as stipulated by CPPI model when equities become volatile,” it said. “[The] fund manager has the option to exercise profit lock-in when a ballpark return is generated from equity asset class.”
The protection of investors’ capital will be safeguarded through a stop loss mechanism that will result in selling off equity exposure if the value of the equity portfolio equals the bond floor on any day.
Pakistan Sarmaya Mehfooz Fund can be subscribed to up until December 12.