Topics to be covered

• Definition & Concept of Mutual Funds

• Advantages of Mutual funds
• Structure of Mutual funds
• Types of Mutual Funds in Vogue
• Mutual Fund history
• History of Mutual Funds in Pakistan
• Key Mutual Fund players
 Definition & Concept

• Mutual fund is a professionally managed type of

collective investment scheme, where money
from many investors are invested in stock, bonds
and short term money market instruments or in
other securities.
• In this investors invest their money into a
common pool or fund and hand over the
investment decision to fund manager/portfolio
manager.
 Advantages of Mutual funds
• Mutual funds lower the investment risk by
‘diversification’.
• Mobilize the small investor’s savings and
Channelize them into lucrative investment
opportunities.
• Provides small investors access to whole Stock
Market.
• Investor can pick the best suited Mutual Fund.
• Saves transaction cost.
Structure of Mutual Fund
Sponsor company

Mutual Fund Trust

Asset Management Company

Custodian

Banker

Registrar and transfer agent

 Types of Mutual Funds in Vogue
They are basically classified into two broad
categories :

• Open Ended Mutual Funds

• Close Ended Mutual Funds

 Types of Mutual Funds in Vogue
Open ended Mutual Funds

• Most common type of mutual fund

• Allows issuance redemption of shares to investor

without involving Stock Market.

• Set up as a trust and the trusty is custodian of

assets of the trust
 Types of Mutual Funds in Vogue
Close Ended Mutual Funds

• Publically trade investment company

• Collects money from investors through IPO

• This money is used for the investment in

securities.
 Types of Mutual Funds in Vogue
• Types of close ended mutual fund

• Sector funds

• Single country funds

• Regional funds

• Emerging sector fund

• Global fund
 Other Types Of Mutual Funds
• Money market funds

• Bond market funds

• Growth funds

• Balanced funds Income funds

• Index funds

• Specialized funds

• Islamic Sector funds

• Aggressive growth funds

 HISTORY OF MUTUAL FUNDS
• Started in Europe in mid of 18th century

• First pooled fund in USA was created in 1893

• Wellington funds in 1928, it was first to include

stocks and bonds in 1929

• 1929 Stock market crash had a great impact on it

 HISTORY OF MUTUAL FUNDS IN
PAKISTAN
• 1st Mutual Fund in 1960’s

• Idea was to increase the participation of

common people in stock market

• Before its establishment 75% stock market

was held by 19 families, 20% with institutional
investors, 5% with common people.
 HISTORY OF MUTUAL FUNDS IN
PAKISTAN
• Two institutes were set :-

• ICP (close ended M.F)

• NIT (open ended M.F)

• Mutual funds are divided into various categories

i.e. equities, fixed income, money markets,
Islamic funds
 HISTORY OF MUTUAL FUNDS IN
PAKISTAN

• Initially it showed slow progress

• Poor management, lack of innovation and lack

of support from regulators and policy makers

• Recently it has shown some progress due to

change in policies
 HISTORY OF MUTUAL FUNDS IN
PAKISTAN

• SECP has played a great role in its progress

• Industrial size was PKR 25 billion in 2002 and

PKR 350 billion in 2009

• Growth of this industry is attributable to

economic growth, increased liquidity, high
corporate earning
 HISTORY OF MUTUAL FUNDS IN
PAKISTAN
• Melting down of stock market in 2008 created
a mess

• It lags behind regional industry only

represents 4% while Indian industry
represents 20%

• Still in infancy and lot of challenges to be

faced ahead.
 Some key Mutual Funds In
Pakistan
National Investment Trust:-
• Established in 1962

• Largest Open Ended Mutual Fund in Pak.

• Largest investor in Stock Exchange with

investment in 500 out of 725 listed companies.

• 150 authorized branches in country.

 Some key Mutual Funds In
Pakistan

• National Investment Trust:-

• Risk is very low because of large portfolio

• Invests in PLS a/c, Modaraba’s, Term

certificates .
 Some key Mutual Funds In
Pakistan
National Investment Trust:-

• Acquired shares stuck in CFS to put market on

track

• NITL launched State enterprise worth of RS. 20

billion

• Investments in OGDC, PSO, PTCL, SUI

NORTHEN, KAPCO, NATIONAL BANK
 Some key Mutual Funds In
Pakistan
ICP ( Investment corporation Fund):-

• Established in 1966

• In 1974 brought within public sector under

nationalization

• Islamization process of ICP started in 1979

• It was greatly involved in providing loans to major

sub sectors i.e. sugar
 Some key Mutual Funds In
Pakistan
Askari Investment Management LTD :-

• Founded in 2005

• Subsidiary of Askari Bank LTD

• Makes capital and money market investments

• Offers Askari Income fund, Equity fund, Askari Asset

allocation fund
 Some key Mutual Funds In
Pakistan
Pakistan Premier fund:-

• Close ended mutual fund, public Ltd company

• Listed in all 3 stock exchanges of Pakistan

• Started operations in 1995

 Some key Mutual Funds In
Pakistan
Metro bank Pakistan Sovereign Fund:-

• Open ended M.F that invests in govt.

securities

• Strategic alliance with Habib Metropolitan

Bank

• Only zero default risk offering company

 Some key Mutual Funds In
Pakistan
• Meezan Investment Management Ltd:-

• Incorporated on July 13th 1995, started

operation in1996

• Close ended M.F & invests in securities listed in

stock exchange

• Maintains 60_80% of net equities the rest

20_40% in debt
 Some key Mutual Funds In
Pakistan
J.S Investment Ltd:-

• Unit Trust Pakistan is the 1st open ended

mutual fund in private sector by J.S group

• Established in 1997 under a trust deed

• Invests in grade debt securities, govt. sector,

money markets UTP Islamic fund
 Performance of mutual funds
• M.F operating in Pak have a disappointing
record In 2009

• Industry touched the lowest level of 174

billion, however showed growth of 17% in last
five months of FY09

• Open ended M.F were of 331.6 billion and

close ended M.F were 54 billion
 Performance of Mutual Funds
Factors for the revival of M.F

• Lack of investment alternatives

• Low rate of return on national savings

• Attractive Valuations of equities

• Supreme court judgment on Dec 1999