1. MUTUAL FUNDS
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2. MUTUAL FUNDS
TABLE of CONTENT
INTRODUCTION………………………………………………………….…………1
CONCEPT OF A MUTUAL FUND…………………………………………………2
ADVANTAGES OF MUTUAL FUNDS………………………………..…………..3
DISADVANTAGES OF MUTUAL FUNDS………………………………………..5
FREQUENTLY USED TERMS…………………………………………………….6
TYPES OF MUTUAL FUND SCHEMES…………………………………………..7
BY STRUCTURE
BY INVESTMENT OBJECTIVE
APPROACHES TO PORTFOLIO
MANAGEMENT (FUND MANAGEMENT STYLE)………………………….…12
MUTUAL FUND AND PAKISTAN………………………………………………13
MUFAP (MUTUAL FUND ASSOCIATION OF PAKISTAN)
TAXATION ON MUTUAL FUNDS
RULES GOVERN MUTUAL FUNDS ………………………………………….14
IN PAKISTAN
PERFORMANCE OF MUTUAL……………………………………………..….15
FUND COMPANIES OF PAKISTAN
MUTUAL FUND COMPANIES IN PAKISTAN………………………………..16
NAMES MUTUAL FUND………………………………………………………..17
(ASSET MANAGEMENT) COMPANIES IN PAKISTAN
INDEX
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3. MUTUAL FUNDS
INTRODUCTION
Specialization is the order of the day, be it with regard to a scheme‟s investment
objective or its targeted investment universe. Given the plethora of options on hand
and the hard-sell adopted by mutual funds vying for a piece of your savings, finding
the right scheme can sometimes seem a bit daunting. Mind you, it‟s not just about
going with the fund that gives you the highest returns. It‟s also about managing risk–
finding funds that suit your risk appetite and investment needs.
So, how can you, the retail investor, create wealth for yourself by investing through
mutual funds? To answer that, we need to get down to brass tacks–what exactly is a
mutual fund?
Very simply, a mutual fund is an investment vehicle that pools in the monies of
several investors, and collectively invests this amount in either the equity market or
the debt market, or both, depending upon the fund‟s objective. This means you can
access either the equity or the debt market, or both, without investing directly in
equity or debt.
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4. MUTUAL FUNDS
CONCEPT OF A MUTUAL FUND
A Mutual Fund is a trust that pools the savings of a number of investors who share a
common financial goal. The money thus collected is then invested in capital market
instruments such as shares, debentures and other securities. The income earned
through these investments and the capital appreciations realized are shared by its
unit holders in proportion to the number of units owned by them. Thus a Mutual Fund
is the most suitable investment for the common man as it offers an opportunity to
invest in a diversified, professionally managed basket of securities at a relatively low
cost. The flow chart below describes broadly the working of a mutual fund:-
Savings form an important part of the
economy of any nation. With savings
invested in various options available
to the people, the money acts as the
driver for growth of the country. Indian
financial scene too presents multiple
avenues to the investors. Though
certainly not the best or deepest of
markets in the world, it has ignited the
growth rate in mutual fund industry to
provide reasonable options for an
ordinary man to invest his savings.
Investment goals vary from person to person. While somebody wants security,
others might give more weightage to returns alone. Somebody else might want to
plan for his child‟s education while somebody might be saving for the proverbial rainy
day or even life after retirement. With objectives defying any range, it is obvious that
the products required will vary as well.
INVESTORS EARN FROM A MUTUAL FUND IN
THREE WAYS:
1. Income is earned from dividends declared by mutual fund schemes from time
to time.
2. If the fund sells securities that have increased in price, the fund has a capital
gain. This is reflected in the price of each unit. When investors sell these units
at prices higher than their purchase price, they stand to make a gain.
3. If fund holdings increase in price but are not sold by the fund manager, the
fund's unit price increases. You can then sell your mutual fund units for a
profit. This is tantamount to a valuation gain.
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5. MUTUAL FUNDS
ADVANTAGES OF MUTUAL
FUNDS
1. PROFESSIONAL MANAGEMENT
Mutual Funds provide the services of experienced and skilled professionals, backed
by a dedicated investment research team that analyses the performance and
prospects of companies and selects suitable investments to achieve the objectives of
the scheme. This risk of default by any company that one has chosen to invest in,
can be minimized by investing in mutual funds as the fund managers analyze the
companies‟ financials more minutely than an individual can do as they have the
expertise to do so. They can manage the maturity of their portfolio by investing in
instruments of varied maturity profiles.
2. DIVERSIFICATION
Mutual Funds invest in a number of companies across a broad cross-section of
industries and sectors. This diversification reduces the risk because seldom do all
stocks decline at the same time and in the same proportion. You achieve this
diversification through a Mutual Fund with far less money than you can do on your
own.
3. CONVENIENT ADMINISTRATION
Investing in a Mutual Fund reduces paperwork and helps you avoid many problems
such as bad deliveries, delayed payments and follow up with brokers and
companies. Mutual Funds save your time and make investing easy and convenient.
4. RETURN POTENTIAL
Over a medium to long-term, Mutual Funds have the potential to provide a higher
return as they invest in a diversified basket of selected securities. Apart from
liquidity, these funds have also provided very good post-tax returns on year to year
basis. Even historically, we find that some of the debt funds have generated superior
returns at relatively low level of risks. On an average debt funds have posted returns
over 10 percent over one-year horizon. The best performing funds have given
returns of around 14 percent in the last one-year period. In nutshell we can say that
these funds have delivered more than what one expects of debt avenues such as
post office schemes or bank fixed deposits. Though they are charged with a dividend
distribution tax on dividend payout at 12.5 percent (plus a surcharge of 10 percent),
the net income received is still tax free in the hands of investor and is generally much
more than all other avenues, on a post tax basis.
5. LOW COSTS
Mutual Funds are a relatively less expensive way to invest compared to directly
investing in the capital markets because the benefits of scale in brokerage, custodial
and other fees translate into lower costs for investors.
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6. LIQUIDITY
In open-end schemes, the investor gets the money back promptly at net asset value
related prices from the Mutual Fund. In closed-end schemes, the units can be sold
on a stock exchange at the prevailing market price or the investor can avail of the
facility of direct repurchase at NAV related prices by the Mutual Fund. Since there is
no penalty on pre-mature withdrawal, as in the cases of fixed deposits, debt funds
provide enough liquidity. Moreover, mutual funds are better placed to absorb the
fluctuations in the prices of the securities as a result of interest rate variation and one
can benefits from any such price movement.
7. TRANSPARENCY
Investors get regular information on the value of your investment in addition to
disclosure on the specific investments made by your scheme, the proportion
invested in each class of assets and the fund manager's investment strategy and
outlook.
8. FLEXIBILITY
Through features such as regular investment plans, regular withdrawal plans and
dividend reinvestment plans; you can systematically invest or withdraw funds
according to your needs and convenience.
9. AFFORDABILITY
A single person cannot invest in multiple high-priced stocks for the sole reason that
his pockets are not likely to be deep enough. This limits him from diversifying his
portfolio as well as benefiting from multiple investments. Here again, investing
through MF route enables an investor to invest in many good stocks and reap
benefits even through a small investment. Investors individually may lack sufficient
funds to invest in high-grade stocks. A mutual fund because of its large corpus
allows even a small investor to take the benefit of its investment strategy.
10. CHOICE OF SCHEMES
Mutual Funds offer a family of schemes to suit your varying needs over a lifetime.
11. WELL REGULATED
All Mutual Funds are registered with SEBI and they function within the provisions of
strict regulations designed to protect the interests of investors. The operations of
Mutual Funds are regularly monitored by SEBI.
12. TAX BENEFITS
Last but not the least, mutual funds offer significant tax advantages. Dividends
distributed by them are tax-free in the hands of the investor. They also give you the
advantages of capital gains taxation. If you hold units beyond one year, you get the
benefits of indexation. Simply put, indexation benefits increase your purchase cost
by a certain portion, depending upon the yearly cost-inflation index (which is
calculated to account for rising inflation), thereby reducing the gap between your
actual purchase cost and selling price. This reduces your tax liability. What‟s more,
tax-saving schemes and pension schemes give you the added advantage of benefits
under Section 88. You can avail of a 20 per cent tax exemption on an investment of
up to Rs 10,000 in the scheme in a year
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7. MUTUAL FUNDS
DISADVANTAGES OF MUTUAL
FUNDS
Mutual funds are good investment vehicles to navigate the complex and
unpredictable world of investments. However, even mutual funds have some
inherent drawbacks. Understand these before you commit your money to a mutual
fund.
1. NO ASSURED RETURNS AND NO PROTECTION OF CAPITAL
If you are planning to go with a mutual fund, this must be your mantra: mutual funds
do not offer assured returns and carry risk. For instance, unlike bank deposits, your
investment in a mutual fund can fall in value. In addition, mutual funds are not
insured or guaranteed by any government body (unlike a bank deposit, where up to
Rs 1 lakh per bank is insured by the Deposit and Credit Insurance Corporation, a
subsidiary of the Reserve Bank of India). There are strict norms for any fund that
assures returns and it is now compulsory for funds to establish that they have
resources to back such assurances. This is because most closed-end funds that
assured returns in the early-nineties failed to stick to their assurances made at the
time of launch, resulting in losses to investors. A scheme cannot make any
guarantee of return, without stating the name of the guarantor, and disclosing the net
worth of the guarantor. The past performance of the assured return schemes should
also be given.
2. RESTRICTIVE GAINS
Diversification helps, if risk minimization is your objective. However, the lack of
investment focus also means you gain less than if you had invested directly in a
single security.
Assume, Reliance appreciated 50 per cent. A direct investment in the stock would
appreciate by 50 per cent. But your investment in the mutual fund, which had
invested 10 per cent of its corpus in Reliance, will see only a 5 per cent appreciation.
3. TAXES
During a typical year, most actively managed mutual funds sell anywhere from 20 to
70 percent of the securities in their portfolios. If your fund makes a profit on its sales,
you will pay taxes on the income you receive, even if you reinvest the money you
made.
4. MANAGEMENT RISK
When you invest in a mutual fund, you depend on the fund's manager to make the
right decisions regarding the fund's portfolio. If the manager does not perform as well
as you had hoped, you might not make as much money on your investment as you
expected. Of course, if you invest in Index Funds, you forego management risk,
because these funds do not employ managers.
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8. MUTUAL FUNDS
FREQUENTLY USED TERMS
NET ASSET VALUE (NAV)
Net Asset Value is the market value of the assets of the scheme minus its
liabilities. The per unit NAV is the net asset value of the scheme divided by the
number of units outstanding on the Valuation Date. EXAMPLE
SALE PRICE
Is the price you pay when you invest in a scheme. Also called Offer Price. It may
include a sales load.
REPURCHASE PRICE
Is the price at which a close-ended scheme repurchases its units and it may
include a back-end load. This is also called Bid Price.
REDEMPTION PRICE
Is the price at which open-ended schemes repurchase their units and close-
ended schemes redeem their units on maturity. Such prices are NAV related.
SALES LOAD
Is a charge collected by a scheme when it sells the units. Also called, „Front-end‟
load. Schemes that do not charge a load are called „No Load‟ schemes.
REPURCHASE OR ‘BACK-END’LOAD
Is a charge collected by a scheme when it buys back the units from the unit
holders.
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9. MUTUAL FUNDS
TYPES OF MUTUAL FUND
SCHEMES
A wide variety of Mutual Fund Schemes exist to cater to the needs such as financial
position, risk tolerance and return expectations etc. The table below gives an
overview into the existing types of schemes in the Industry.
BY STRUCTURE
a) OPEN-ENDED SCHEMES
Open-ended or open mutual funds are much more common than closed-ended funds
and meet the true definition of a mutual fund – a financial intermediary that allows a
group of investors to pool their money together to meet an investment objective– to
make money! An individual or team of professional money managers manage the
pooled assets and choose investments, which create the fund‟s portfolio. They are
established by a fund sponsor, usually a mutual fund company, and valued by the
fund company or an outside agent. This means that the fund‟s portfolio is valued at
"fair market" value, which is the closing market value for listed public securities. An
open-ended fund can be freely sold and repurchased by investors.
Buying and Selling:
Open funds sell and redeem shares at any time directly to shareholders. To make
an investment, you purchase a number of shares through a representative, or if
you have an account with the investment firm, you can buy online, or send a
check. The price you pay per share will be based on the fund‟s net asset value as
determined by the mutual fund company. Open funds have no time duration, and
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10. MUTUAL FUNDS
can be purchased or redeemed at any time, but not on the stock market. An open
fund issues and redeems shares on demand, whenever investors put money into
the fund or take it out. Since this happens routinely every day, total assets of the
fund grow and shrink as money flows in and out daily. The more investors buy a
fund, the more shares there will be. There's no limit to the number of shares the
fund can issue. Nor is the value of each individual share affected by the number
outstanding, because net asset value is determined solely by the change in
prices of the stocks or bonds the fund owns, not the size of the fund itself. Some
open-ended funds charge an entry load (i.e., a sales charge), usually a
percentage of the net asset value, which is deducted from the amount invested.
Advantages:
Open funds are much more flexible and provide instant liquidity as funds sell
shares daily. You will generally get a redemption (sell) request processed
promptly, and receive your proceeds by check in 3-4 days. A majority of open
mutual funds also allow transferring among various funds of the same “family”
without charging any fees. Open funds range in risk depending on their
investment strategies and objectives, but still provide flexibility and the benefit of
diversified investments, allowing your assets to be allocated among many
different types of holdings. Diversifying your investment is key because your
assets are not impacted by the fluctuation price of only one stock. If a stock in the
fund drops in value, it may not impact your total investment as another holding in
the fund may be up. But, if you have all of your assets in that one stock, and it
takes a dive, you‟re likely to feel a more considerable loss.
Risks:
Risk depends on the quality and the kind of portfolio you invest in. One unique
risk to open funds is that they may be subject to inflows at one time or sudden
redemptions, which leads to a spurt or a fall in the portfolio value, thus affecting
your returns. Also, some funds invest in certain sectors or industries in which the
value of the in the portfolio can fluctuate due to various market forces, thus
affecting the returns of the fund.
b) CLOSE-ENDED SCHEMES
Close-ended or closed mutual funds are really financial securities that are traded on
the stock market. Similar to a company, a closed-ended fund issues a fixed number
of shares in an initial public offering, which trade on an exchange. Share prices are
determined not by the total net asset value (NAV), but by investor demand. A
sponsor, either a mutual fund company or investment dealer, will raise funds through
a process commonly known as underwriting to create a fund with specific investment
objectives. The fund retains an investment manager to manage the fund assets in
the manner specified.
Buying and Selling: Unlike standard mutual funds, you cannot simply mail a
check and buy closed fund shares at the calculated net asset value price.
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Shares are purchased in the open market similar to stocks. Information
regarding prices and net asset values are listed on stock exchanges,
however, liquidity is very poor. The time to buy closed funds is immediately
after they are issued. Often the share price drops below the net asset value,
thus selling at a discount. A minimum investment of as much as $5000 may
apply, and unlike the more common open funds discussed below, there is
typically a five-year commitment.
Advantages:
The prospect of buying closed funds at a discount makes them appealing to
experienced investors. The discount is the difference between the market price of
the closed-end fund and its total net asset value. As the stocks in the fund
increase in value, the discount usually decreases and becomes a premium
instead. Savvy investors search for closed-end funds with solid returns that are
trading at large discounts and then bet that the gap between the discount and the
underlying asset value will close. So one advantage to closed-end funds is that
you can still enjoy the benefits of professional investment management and a
diversified portfolio of high quality stocks, with the ability to buy at a discount.
Risks:
Investing in closed-end funds is more appropriate for seasoned investors.
Depending on their investment objective and underlying portfolio, closed-ended
funds can be fairly volatile, and their value can fluctuate drastically. Shares can
trade at a hefty discount and deprive you from realizing the true value of your
shares. Since there is no liquidity, investors must buy a fund with a strong
portfolio, when units are trading at a good discount, and the stock market is in
position to rise.
BY INVESTMENT OBJECTIVE:
A scheme can also be classified as growth scheme, income scheme, or balanced scheme
considering its investment objective. Such schemes may be open-ended or close-ended
schemes as described earlier. Such schemes may be classified mainly as follows:
GROWTH / EQUITY ORIENTED SCHEMES
The aim of growth funds is to provide capital appreciation over the medium to long-
term. Such schemes normally invest a major part of their corpus in equities. Such
funds have comparatively high risks. These schemes provide different options to the
investors like dividend option, capital appreciation, etc. and the investors may
choose an option depending on their preferences. The investors must indicate the
option in the application form. The mutual funds also allow the investors to change
the options at a later date. Growth schemes are good for investors having a long-
term outlook seeking appreciation over a period of time.
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EQUITY FUNDS
As explained earlier, such funds invest only in stocks, the riskiest of asset classes.
With share prices fluctuating daily, such funds show volatile performance, even
losses. However, these funds can yield great capital appreciation as, historically,
equities have outperformed all asset classes. At present, there are four types of
equity funds available in the market. In the increasing order of risk, these are:
INDEX FUNDS
These funds track a key stock market index, like the KSE 100 index (Karachi Stock
Exchange) or NYSE (New York stock exchange). Hence, their portfolio mirrors the
index they track, both in terms of composition and the individual stock weightages.
For instance, an index fund that tracks the KSE will invest only in the KSE 100 index
stocks. The idea is to replicate the performance of the benchmarked index to near
accuracy.
SECTOR FUNDS
The riskiest among equity funds, sector funds invest only in stocks of a specific
industry, say IT or FMCG. A sector fund‟s NAV will zoom if the sector performs well;
however, if the sector languishes, the scheme‟s NAV too will stay depressed.
Barring a few defensive, evergreen sectors like FMCG and OIL&GAS most other
industries alternate between periods of strong growth and bouts of slowdowns. The
way to make money from sector funds is to catch these cycles–get in when the
sector is poised for an upswing and exit before it slips back. Therefore, unless you
understand a sector well enough to make such calls, and get them right, avoid sector
funds.
INCOME / DEBT ORIENTED SCHEME
The aim of income funds is to provide regular and steady income to investors. Such
schemes generally invest in fixed income securities such as bonds, corporate
debentures, Government securities and money market instruments. Such funds are
less risky compared to equity schemes. These funds are not affected because of
fluctuations in equity markets. However, opportunities of capital appreciation are also
limited in such funds. The NAVs of such funds are affected because of change in
interest rates in the country. If the interest rates fall, NAVs of such funds are likely to
increase in the short run and vice versa. However, long term investors may not
bother about these fluctuations.
Such funds attempt to generate a steady income while preserving investors‟ capital.
Therefore, they invest exclusively in fixed-income instruments securities like bonds,
debentures, Government of India securities, and money market instruments such as
certificates of deposit (CD), commercial paper (CP) and call money. There are
basically three types of debt funds.
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SPECIALIZED FUNDS
Specialized funds resemble sector funds in most respects. The major difference is
the type of securities that make up the fund's portfolio. For example, the portfolio
may consist of common stocks only, foreign securities only, bonds only, new stock
issues only, over - the - counter securities only, and so on.
ISLAMIC FUNDS
In case of Islamic Funds, the investment made in different instruments is to be in line
with the Islamic Shairah Rules. The Fund is generally to be governed by an Islamic
Shariah Board. And then there is a purification process that needs to be followed, as
some of the money lying in reserve may gain interest, which is not desirable in case
of Islamic investments.
BALANCED FUND
The aim of balanced funds is to provide both growth and regular income as such
schemes invest both in equities and fixed income securities in the proportion
indicated in their offer documents. These are appropriate for investors looking for
moderate growth. They generally invest 40-60% in equity and debt instruments.
These funds are also affected because of fluctuations in share prices in the stock
markets. However, NAVs of such funds are likely to be less volatile compared to
pure equity funds.
As the name suggests, balanced funds have an exposure to both equity and debt
instruments. They invest in a pre-determined proportion in equity and debt–normally
60:40 in favour of equity. On the risk ladder, they fall somewhere between equity and
debt funds, depending on the fund‟s debt-equity spilt–the higher the equity holding,
the higher the risk. Therefore, they are a good option for investors who would like
greater returns than from pure debt, and are willing to take on a little more risk in the
process.
MONEY MARKET OR LIQUID FUND
These funds are also income funds and their aim is to provide easy liquidity,
preservation of capital and moderate income. These schemes invest exclusively in
safer short-term instruments such as treasury bills, certificates of deposit,
commercial paper and inter-bank call money, government securities, etc. Returns on
these schemes fluctuate much less compared to other funds. These funds are
appropriate for corporate and individual investors as a means to park their surplus
funds for short periods.
BOND FUNDS
These funds invest in government bonds and corporate bonds. These Bond Funds
offer a steady source of income and in many times these incomes get the advantage
of Tax Exemption.
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Approaches to Portfolio Management
(Fund Management Style):
Mutual funds can be broadly classified into two categories in terms of the fund
management style i.e. actively managed funds and passively managed funds
(popularly referred to as index funds).
ACTIVELY MANAGED FUNDS
Actively managed funds are the ones wherein the fund manager uses his skills and
expertise to select invest-worthy stocks from across sectors and market segments.
The sole intention of actively managed funds is to identify various investment
opportunities in the market in order to clock superior returns, and in the process
outperform the designated benchmark index. in active fund management two basic
fund management styles that are prevalent are:
Growth Investment Style: wherein the primary objective of equity investment is to
obtain capital appreciation. this investment style would make the funds manager pick
and choose those shares for investment whose earnings are expected to increase at
the rates that exceed the normal market levels. they tend to reinvest their earnings
and generally have high P/E ratios and low Dividend Yield ratio.
Value Investment Style: wherein the funds manager looks to buy shares of those
companies which he believes are currently under valued in the market, but whose
worth he estimates will be recognized in the market valuation eventually.
PASSIVELY MANAGED FUNDS
On the contrary, passively managed funds/index funds are aligned to a particular
benchmark index like KSE 100 index KSE 30 index. The endeavor of these funds is
to mirror the performance of the designated benchmark index, by investing only in
the stocks of the index with the corresponding allocation or weightage.
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MUTUAL FUND AND PAKISTAN
MUFAP (MUTUAL FUND ASSOCIATION OF
PAKISTAN)
Mutual Funds Association of Pakistan (MUFAP) is the trade body for Pakistan‟s multi
billion rupees asset management industry. The money our members manage is in a
wide variety of investment vehicles including stocks, bonds, money market
instruments, government securities and bank deposits. Our role is to ensure
transparency, high ethical conduct and growth of the mutual fund industry. MUFAP
was formed in 1996 by Mr. Zaigham Mahmood Rizvi, ex-Chairman and founder
member, and was formally licensed in 2001 as a public limited company (by
guarantee) under Section 42 of the Companies Ordinance, 1984 by Ministry of
Commerce (MOC) and is thus a quasi legal entity. After the establishment of MUFAP
in 1996, private and foreign firms were allowed to float open-ended funds for the
general public. This time also saw the stock market‟s performance scale new heights
as a result of positive government policies and incentives, registering a growth of
more than 15 times in the net assets of the mutual funds between 2000-2008. Mutual
Funds were initially overseen by the Corporate Law Authority (“CLA”) under its
Securities Wing. The CLA, then a division of the Ministry of Finance, was gradually
transformed and made independent as the Securities and Exchange Commission of
Pakistan (“SECP”) as part of the Capital Market Development Program (CMDP)
initiative of the Asian Development Bank undertaken for Pakistan. The CMDP
envisaged formation of four types of Self-Regulated Organizations (“SROs”) to
function under the SECP:
Stock Exchanges recognized as separate SROs;
Mutual Funds Association of Pakistan (MUFAP);
Leasing Association of Pakistan (LAP); and
Modaraba Association of Pakistan (MAP).
MUFAP‟s role is to establish the essential codes and standards within the industry to
ensure the trust and confidence of investors and build the industry as a whole.
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16. MUTUAL FUNDS
TAXATION ON MUTUAL FUNDS
The income of mutual funds is exempt from Income Tax, if not less than 90% of the
income of the year, as reduced by capital gains is distributed amongst the unit
holders as dividend or bonus units.
TAXATION ON UNIT HOLDERS
Holders of mutual funds are subject to Income Tax on dividend income received from
a mutual fund (excluding the amount of dividend paid out of capital gains on listed
securities) as under:
Public Company and Insurance Company 5%.If received by any other person,
including a non-resident 10%
Capital gain on disposition of units in a mutual fund is exempted from tax till such
time that capital gain on sale of securities listed on the stock exchanges is exempt
from such tax.
TAX CREDIT
As funds are listed at the stock exchanges, unit holders of the mutual funds, other
than a company, are entitled to a tax credit under section 62 of the Income Tax
Ordinance, 2001 on purchase of new units. The amount on which tax credit is
allowed is the lower of (a) amount invested in purchase of new units, (b) fifteen
percent of the taxable income of the unit holder, or (c ) Rupees Five Hundred
Thousand (PKR. 500,000), and is calculated by applying the average rate of tax of
the unit holder for the tax year. If the units are disposed within twelve months, the
amount of tax payable for the tax year in which the units are disposed is increased
by the amount of credit allowed.
RULES GOVERN MUTUAL FUNDS
IN PAKISTAN
There are two rules govern mutual funds in
Pakistan, which are:
1) Investment Companies and Investment Advisors' Rules, 1971. (Govern
closed-end mutual funds)
2) 2. Asset Management Companies Rules, 1995. (Govern open-ended mutual
funds)
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17. MUTUAL FUNDS
PERFORMANCE OF MUTUAL
FUND COMPANIES OF PAKISTAN
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18. MUTUAL FUNDS
MUTUAL FUND COMPANIES IN
PAKISTAN
Some of the mutual fund company‟s details are given below:
NATIONAL INVESTMENT TRUST LIMITED
The National Investment Trust Limited (NITL) is the first Asset Management
Company of Pakistan, formed in 1962, had Funds under management of Rs. 81.301
billion, with approximately 59,619 unit holders as on June 30,2011. NIT's distribution
network comprises of 22 branches, various Authorized bank branches all over
Pakistan and Arab Emirates Investment Bank (AEIB) in Dubai (UAE).
PRODUCTS & INVESTMENT STRATEGY
The National Investment Unit Trust (NIUT) is the Pakistan‟s largest and oldest
Mutual Fund. As on June 30, 2011, NIUT had funds under management of around
Rs. 40.464 billion invested in over 440 listed companies and had approximately
56,195 unit holders. NITL's distribution network comprises of 22 NIT branches,
various Authorized bank branches all over Pakistan and Arab Emirates Investment
Bank (AEIB) in Dubai (UAE). The Trust constituted under the Trust Deed dated 12th
November 1962, executed between National Investment Trust Ltd (NITL) as
Management Company and National Bank of Pakistan as Trustee.
MEEZAN BALANCED FUND
Meezan Balanced Fund is the first Shariah compliant balanced fund in Pakistan.
MBF is a closed-end balanced fund constituted under Non-Banking Finance
Companies (Establishment Regulation) Rules, 2003. It was launched on December
20, 2004 with the objective to provide stable income stream along with equity upside.
The investment objective of MBF is to generate long term capital appreciation as well
as current income by creating a balanced portfolio that is invested both in high
quality equity securities and MBF invests 40-60% of the funds in stocks which
provides capital appreciation and returns higher than those of bonds and bank
deposits. The rest of the funds are invested in various Islamic income instruments.
such as Sukuks (Islamic Bonds), Certificate of Islamic Investments, Musharika and
Morabaha instruments, Shariah-compliant spread transactions, and other Islamic
income products, which provides the security of a constant income stream to
investors.
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19. MUTUAL FUNDS
NAMES MUTUAL FUND
(ASSET MANAGEMENT) COMPANIES IN
PAKISTAN
1) NATIONAL INVESTMENT 16) NATIONAL ASSET
TRUST MANAGEMENT COMPANY
2) NBP FULLERTON ASSET LIMITED
MANAGEMENT LIMITED 17) NATIONAL FULLERTON
3) ABAMCO LIMITED ASSET MANAGEMENT
4) AKD INVESTMENT LIMITED - NAFA
MANAGEMENT LTD. 18) NATIONAL IINVESTMENT
5) AL FALAH GHP INVESTMENT TRUST LTD.
MANAGEMENT 19) NBP CAPITAL LIMITED
6) AL-MEEZAN INVESTMENT 20) NOMAN ABID INVESTMENT
MANAGEMENT LIMITED MANAGEMENT LIMITED
7) AMZ ASSET MANAGEMENT 21) SAFEWAY MANAGEMENT
LTD. LTD.
8) ARIF HABIB INVESTMENT 22) UBL FUND MANAGERS LTD.
MANAGEMENT LTD. 23) WE INVESTMENT
9) ASIAN CAPITAL MANAGEMENT LIMITED
MANAGEMENT (PVT.) LTD 24) DAWOOD CAPITAL
10) ASKARI ASSET MANAGEMENT LTD.
MANAGEMENT LTD. 25) FAYSAL ASSET
11) ATLAS ASSET MANAGEMENT MANAGEMENT LIMITED
LTD. 26) FIRST CAPITAL
12) BMA ASSET MANAGEMENT INVESTMENTS LTD
LTD.
13) HABIB ASSETS
MANAGEMENT LTD.
14) HBL ASSET MANAGEMENT
LTD
15) KASB FUND LIMITED
19