NEGATIVE

⚡ Flash Summary

The Lakson Money Market Fund (LMMF) reported a return of 9.69% for the quarter ended September 30, 2025, underperforming its benchmark return of 10.68% by 0.99%. Asset allocation was heavily concentrated in T-bills (77.5%), with significant allocations to cash (10.8%) and placements with banks & DFIs (10.1%). The fund’s size stood at PKR 29,343 million. Economic conditions in Pakistan showed early signs of stabilization, with inflation easing and foreign reserves improving.

📌 Key Takeaways

• 1. 📉 **Underperformance:** The fund’s return (9.69%) lagged behind the benchmark (10.68%) by 0.99% in 1QFY26.
• 2. 💰 **Asset Allocation:** Heavily weighted towards T-bills (77.5%), indicating a conservative strategy.
• 3. 🏦 **Cash Holdings:** Significant cash position at 10.8% suggests liquidity management.
• 4. 🏦 **DFI Exposure:** Placement with Banks & DFIs comprised 10.1% of the portfolio.
• 5. ⚖️ **WAM:** Weighted average maturity (WAM) of the portfolio stood at 42 days, indicative of a short-term focus.
• 6. 💲 **Fund Size:** The fund’s size reached PKR 29,343 million as of September 30, 2025.
• 7. ⬇️ **Inflation Decline:** Q1-FY26 average inflation was 4.2%, a significant decrease from 9.2% in the same period last year.
• 8. 🇵🇰 **External Deficit:** Current account deficit reached USD 624 million for the first two months of FY26, higher than the previous year’s USD 430 million.
• 9. ⬆️ **Export Growth:** Exports rose by 11% YoY to USD 6.7 billion, primarily driven by textiles and food.
• 10. ⬆️ **Remittance Growth:** Remittances grew by 7% to USD 6.35 billion, providing support to the external account.
• 11. ⬆️ **FX Reserves:** Foreign exchange reserves improved to USD 19.8 billion by the end of September, with SBP reserves at USD 14.4 billion.
• 12. ₨ **Rupee Appreciation:** The Pakistani Rupee appreciated by 0.9% FYTD, closing at PKR 281.3/USD.
• 13. 💡 **Circular Debt Resolution:** A circular debt resolution agreement was signed on September 24, 2025, paving the way for a PKR 1.225 trillion bank loan.
• 14. 🏦 **Policy Rate Maintained:** The Central Bank maintained the policy rate at 11% during the quarter.
• 15. ⬆️ **Sovereign Rating Upgrade:** S&P Global upgraded Pakistan’s sovereign credit rating to B- from CCC+ with a Stable Outlook.

🎯 Investment Thesis

HOLD. While the fund offers stability and low volatility suitable for risk-averse investors, its underperformance relative to the benchmark suggests there may be better opportunities for return within the money market fund category. The fund’s heavy concentration in T-bills provides security but may limit upside potential. The economic outlook for Pakistan suggests gradual stabilization, which could benefit the fund in the medium term, but investors should monitor performance closely.

⚡ Flash Summary

The Lakson Money Market Fund (LMMF) reported a return of 9.69% for the quarter ended September 30, 2025, underperforming its benchmark return of 10.68% by 0.99%. Asset allocation was heavily concentrated in T-bills (77.5%), with significant allocations to cash (10.8%) and placements with banks & DFIs (10.1%). The fund’s size stood at PKR 29,343 million. Economic conditions in Pakistan showed early signs of stabilization, with inflation easing and foreign reserves improving.

📌 Key Takeaways

• 1. 📉 **Underperformance:** The fund’s return (9.69%) lagged behind the benchmark (10.68%) by 0.99% in 1QFY26.
• 2. 💰 **Asset Allocation:** Heavily weighted towards T-bills (77.5%), indicating a conservative strategy.
• 3. 🏦 **Cash Holdings:** Significant cash position at 10.8% suggests liquidity management.
• 4. 🏦 **DFI Exposure:** Placement with Banks & DFIs comprised 10.1% of the portfolio.
• 5. ⚖️ **WAM:** Weighted average maturity (WAM) of the portfolio stood at 42 days, indicative of a short-term focus.
• 6. 💲 **Fund Size:** The fund’s size reached PKR 29,343 million as of September 30, 2025.
• 7. ⬇️ **Inflation Decline:** Q1-FY26 average inflation was 4.2%, a significant decrease from 9.2% in the same period last year.
• 8. 🇵🇰 **External Deficit:** Current account deficit reached USD 624 million for the first two months of FY26, higher than the previous year’s USD 430 million.
• 9. ⬆️ **Export Growth:** Exports rose by 11% YoY to USD 6.7 billion, primarily driven by textiles and food.
• 10. ⬆️ **Remittance Growth:** Remittances grew by 7% to USD 6.35 billion, providing support to the external account.
• 11. ⬆️ **FX Reserves:** Foreign exchange reserves improved to USD 19.8 billion by the end of September, with SBP reserves at USD 14.4 billion.
• 12. ₨ **Rupee Appreciation:** The Pakistani Rupee appreciated by 0.9% FYTD, closing at PKR 281.3/USD.
• 13. 💡 **Circular Debt Resolution:** A circular debt resolution agreement was signed on September 24, 2025, paving the way for a PKR 1.225 trillion bank loan.
• 14. 🏦 **Policy Rate Maintained:** The Central Bank maintained the policy rate at 11% during the quarter.
• 15. ⬆️ **Sovereign Rating Upgrade:** S&P Global upgraded Pakistan’s sovereign credit rating to B- from CCC+ with a Stable Outlook.

🎯 Investment Thesis

HOLD. While the fund offers stability and low volatility suitable for risk-averse investors, its underperformance relative to the benchmark suggests there may be better opportunities for return within the money market fund category. The fund’s heavy concentration in T-bills provides security but may limit upside potential. The economic outlook for Pakistan suggests gradual stabilization, which could benefit the fund in the medium term, but investors should monitor performance closely.