INTERVIEW OF CHAIRMAN NATIONAL INVESTMENT TRUST
SHABBIR H. KAZMI
Nov 12 - 18, 2012
PAGE: NIT HAS COMPLETED HALF A CENTURY OF ITS SUCCESSFUL OPERATIONS. WHAT ARE THE MAJOR LANDMARKS ACHIEVED?
WAZIR ALI KHOJA: NIT has completed 50 years of its enviable track record. During this long journey, NIT has come a long way and has achieved various milestones including consistently paying dividends in billion of rupees since its inception in 1962, achieving the highest number of unit holders and introducing new products to cater to the needs of investors with varying risk appetite besides having largest branch network in the country to provide investment services to the customers at their door step.
Keeping in view the long awaited demand by investors and in order to cater to their varied investment needs, NITL for the very first time ventured into the fixed income fund category by launching two funds in FY10. NIT Government Bond Fund, a very low risk product was launched in Nov. 2009 followed by NIT Income Fund, which was introduced in Feb. 2010 designed for low to medium risk taking investors.
NIT is also the pioneer in introducing the first Co-Branded ATM card facility for its customers in Mutual Fund Industry. NIT - Summit Bank Co-Branded ATM card is a joint product of the two institutions. In order to facilitate its unit holders, a state of the art Investors Facilitation Centre (IFC) has been established which is providing all sorts of customer related services to its unit holders under one roof. Recently, NIT has opened 3 new branches at Karachi and Lahore to expand its sales network. With the addition of these three branches, the nationwide distribution network now comprises 22 branches. Work on opening up a few more branches is in hand. NIT has also been shouldering national responsibility of providing financial support to affectees of natural calamities at time of need. It has been funding trusts, institutions and agencies providing social services to the neglected population of the country. It has also played a vital role in motivating and acknowledging the service of natural legends in sports, culture, education etc. through awards. NIT as a national institution of prestige did not forget welfare of its employees and has introduced Hajj Scheme for its employees so that they could perform the spiritual obligations without any financial burden.
PAGE: OVER THESE 50 YEARS NIT HAS BEEN CONSISTENTLY PAYING DIVIDEND TO ITS UNIT HOLDERS. HOW THIS ENVIABLE TRACK RECORD HAS BEEN MAINTAINED?
KHOJA: NIT has a history of generating consistent returns for its valuable investors and infact has not missed a dividend payment even once in its entire history of operation. This became possible due to investments made by NIT in a number of companies enjoying growth potential and providing a regular stream of dividend inflow. Further, NIT follows a strategy of investing in blue chip companies offering a mix of both dividend income and capital gains potential.
PAGE: NIT WAS THE FIRST EVER OPEN-ENDED MUTUAL FUND ESTABLISHED IN PAKISTAN AND IT HAS THE LARGEST ASSETS UNDER ITS MANAGEMENT. WHAT ARE THE FACTORS THAT HELPED IN MAINTAINING THE LEADERSHIP?
KHOJA: NIT commenced its operations in 1962 with the launch of an equity Fund, NI(U)T, which was the first ever mutual fund in the country. NIT has been successfully managing its flagship product of NI(U)T Fund which has grown to be the single largest equity mutual fund of the country in terms of asset size. NITL has the prestige of serving the highest number of unit holders of any mutual fund in the country. The number of unit holders adding up to around 57,000 is the highest ever customer base served by a single mutual fund service provider in the country. With net assets constituting about 21% of the entire mutual funds industry, NIT's equity funds constitute 85% of the industry's open-end equity funds as on September 30, 2012.
The equity portfolio of NI(U)T comprises more than 400 companies spread across all the sectors of the economy that provides it with maximum diversification and also minimizes the risk to its investors. NIT has representation on the highest number of the companies' boards with a total of 130 directorships on the board of 115 companies within our portfolio which besides safeguarding the interest of our unit holders, also protects the rights of other shareholders by providing professional inputs in running the affairs of the companies and delivering healthy returns.
All investment decisions of NIT are taken by an investment committee of NITL which comprises highly qualified professionals. These professionals take decisions on the basis of in-depth research carried out by Research Department of NIT. Moreover, we have specialized trading department for quick and timely execution of transactions.
PAGE: WHAT WERE THE KEY STRATEGIES FOLLOWED ENABLING NIT TO POST ENVIABLE PERFORMANCE?
KHOJA: NIT designs its investment strategy according to the prevailing market conditions. NIT team has been very active and successful in improving the performance of the Fund, the result of which is evident from the fact that NI(U)T Fund has outperformed its benchmark by 0.34% during the 1st quarter ended 30th September 2012.
In line with the strategy adopted during the last couple of years, we are striving to reduce the number of companies held in our portfolio by offloading the shares of the companies where the fund's holding is non-remunerative. As a result, the number of companies has further been reduced to around 400. This exercise will continue in the period ahead as well, while keeping the best interest of the fund in mind. The Fund also adopted buy/sell positions in other sectors during the year to benefit from short-term trading opportunities available in the market without any detrimental impact on stock market.
PAGE: CAN ONE SAY THAT NIT HAS BEEN PROVIDING LIQUIDITY TO STOCK MARKET, HELPING IN PRICE DISCOVERY AND ABOVE ALL EXTENDING A HELPING HAND DURING THE BEARISH SPELLS?
KHOJA: The Government and other stakeholders always reposed confidence in NIT and assigned it important roles on many occasions, be it to generate liquidity or to provide support to the capital market in time of crisis. NIT had an initial mandate to take up a specific percentage of every initial public offering (IPO) under the preferential quota regime. This helped accelerate the pace of industrialization in the country and also provided capital markets the much needed liquidity because of the long-term investment perspective. Furthermore, at the time of unprecedented crisis in the stock market, NIT launched NIT-Equity market Opportunity (NIT-EMOF) Fund in July 2008 to support the stock market. At the time of removal of the floor on the stock market which remained in place for 110 days due to unproportioned nature of the crisis, the Government and other stakeholders, foreseeing a massive selling pressure from local and foreign investors, once again asked NIT to launch a fund to support the stock market. NIT launched its NIT-State Enterprise Fund to help support the market. It is evident from the record that NIT succeeded in bringing stability in the stock market by restoring the confidence level of investors.
PAGE: THE VALUE OF ASSETS UNDER NIT MANAGEMENT IS INCHING TOWARDS RS 80 BILLION. WHAT ARE THE REASONS THAT ATTRACT INVESTORS TO NIT EVEN DURING THE BEARISH SPELLS?
KHOJA: NIT has always played its role in stabilizing the market sentiments. A highly professional team of NIT, under the guidance of highly qualified and experienced board, has the expertise to deliver in the toughest of times and possesses ability to prudently manage the investment portfolio, thereby generating good and consistent returns for its investors.
NIT has never made a distress sale at time of bearish markets as it remained invested a certain portion of our portfolio in short term highly liquid government securities and bank deposits to meet redemptions. During the last couple of years, NIT has met all redemptions through internal cash generation without recourse to borrowing which is a milestone in itself. This has created a strong image which has built a trust among NIT unit holders.