By Saeedeh Fakhim, Mahdi Goodarzi & Omid Q. Rose:
Mutual Fund is a type of financial institution which invests funds received from investors in a set of negotiable papers. Mutual funds have been established since 2008 in Iran. The SEO (Securities & Exchange Organization) issues licenses for establishment of mutual funds. Three main elements of each mutual fund in Iran include manager of fund, trustee and guarantor. Considering high validity of these companies and also careful supervision of the stock exchange on them, money default risk of the investors in mutual funds has reached approximately zero. Reception by the shareholders and considerable growth of mutual funds of Iran on the one hand and enactment of Law for Development of New Financial Instruments and Institutions in February 2010 on the other hand increased hope for increasing development of these funds. In this paper, we introduce and review return of Agah fund in Iran capital market.
Agah Mutual Fund
Based on paragraph 20 of article 1 of stock exchange law enacted in December 2005, Agah Mutual Fund started its activity by receiving license from stock exchange under registration No. 10616 as mutual fund on 13 July 2008. Performance of this fund is based on provisions of the articles of association and prospectus and based on the related laws and regulations.
Elements of Agah Mutual Fund
Elements of Agah Mutual Fund include assembly, administrator, trustee, guarantor, auditor and agents of the fund each introduced as follows. Assembly of the fund is composed of the owners of mutual funds units and formalities for invitation, holding and making decision have mentioned in articles of association. The fund assembly can change articles of association, prospectus, administrator, trustee and auditor. Only owners of mutual fund units have voting rights in assemblies. The fund manager is Agah agency. Trustee of the fund is Azmoodegan auditing institute which is responsible for supervision on proper execution of the articles of association to protect interests of investors.
Guarantor of the fund is Agah Group and has guaranteed payment of the investors’ funds within 7 days after presentation of request for cancelation. It finances the required funds for this purpose, if necessary.
Composition of assets of Agah fund
Considering that Agah mutual fund is one of the initially small-sized [1] mutual funds, it spends most of its funds for purchase of shares and preemptive rights as described in Table 1:
Table 1 – Authorized composition of the assets of Agah mutual fund according to prospectus of the fund
Considering Table 1, diagram of composition of the assets of Agah mutual fund on 6 January 2015 is reported in Figure 1.
Figure 1 – composition of the assets of Agah mutual fund on 6 January 2015
Performance of Agah fund in the past five years
Considering the official statistics announced by Financial Information Processing of IRAN(FIPIran), statistical net value of each NAV of Agah fund was 19,100,528 on 21 December 2014 and this figure has had return of 952% as in 2009 and in a 5-year period. Total net value of asset of Agah mutual fund has reached Rls. 384,003,412,466 at the end of Azar (December), 2014. In Table 2, 5-year return of the Agah fund is given every year in comparison with the stock exchange index and total value of the stock exchange.
Table 2 – Annual return of Agah fund and total stock exchange index within 5 years
Comparative diagram of Table 2 is given as follows based on diagram 1:
Diagram 1 – Annual return of Agah fund compared with annual growth of total index and stock exchange market value in 5 years
Considering diagram 1 and Figure 2, return of Agah fund except for 2011 was better than the market index in other cases. In 2014 when market confronted with stagnation, the obtained result was better than the market index despite negative return. The comparative diagram of the return of Agah fund and stock exchange since establishment of the fund to 6 January 2015 is observed according to diagram 2 and also composition of shares of different enterprises in assets of this fund is observed in Figure 2.
Diagram 2 – Comparative diagarm of return of Agah fund and stock exchnage since establishment of the fund to 6 January 2015
Figure 2 – Composition of shares of Agah
Performance of Agah fund compared with 5 top funds of market
Since comparison of market index with performance of the fund along doesn’t give accurate result, performance of the fund compared with index of 5 top funds of the market is also presented. Characteristics of these five funds are as follows:
- All five funds are of the in-stocks funds.
- Life of the funds is between 4 and 7 years and their mean life is 5.4 years.
- The minimum return of these funds is 340% since establishment and the maximum return is 1120 %.
- All five selected funds are of the most reputable and noted as highly-efficient funds of market.
- Information of the funds has been extracted from Financial Information Processing of IRAN (FIPIran).
Considering the above hypotheses, mean return of the top funds and Agah fund is given in Table 3.
Table 3 – Mean return of the top funds in the last 5 years compared with Agah fund
Conclusion
Life of the mutual funds in Iran is short but they could be regarded as low-risk and reliable investment instruments during the same years. Agah mutual fund is one of the oldest and known funds of the capital market and it has had acceptable and high performance compared with the market index and the mean return of the top five funds of the market by relying on official data from Financial Information Processing of IRAN (FIPIran). The top five funds used in this article are comparable in terms of size, type of activity, life and return.
- keywords:
Fund, investment, agah, return, performance
- References
[1]: Small-sized fund refers to the initial and minimum volume of the fund only and does not limit the capacity in the future.
