MUTUAL FUNDING

COMPANIES
 What is mutual funding company ?
◦ A mutual fund is a company that pools money from many investors and
invests the money in securities such as stocks, bonds, and short-term
debt. The combined holdings of the mutual fund are known as its portfolio.
In Pakistan Mutual Fund is a single portfolio of investments where
investors put their money to be managed by an asset management
company on behalf of its many investors. This allows each investor access
to a professional managed pool of funds.
 History of mutual funds in Pakistan
In 1962 : Government of Pakistan established NITL which launched first open end
equity fund in Pakistan.

1966 : Government of Pakistan established ICP which launched series of closed end
funds .

Only in mids 90’s the sprouts of mutual funds is witnessed .

1994-1995: More funds launched in private sector .

2006: Total number of AMC’s are 30 managing 56 mutual funds .

Mutual funds in Pakistan
In Pakistan NIT (national investment trust )offered first open ended fund in
1962.

Mutual funds in Pakistan are registered and legally established in the form
of a trust under the Trust Act of 1882 .

The mutual fund industry is regulated by the securities and exchange

commission of Pakistan (SECP) which licenses each asset management
company with NBFC rules 2003 .
Structure/ parties of mutual funds
Structure of mutual funds
Investors : An investor is any person or other entity (such as a firm or mutual fund)
who commits capital with the expectation of receiving financial returns.

Sponsors: Sponsors is the company that set up mutual funds as per the provision laid by
the SEC (security exchange commission ). SEC usually fixes the criteria of the sponsors based
on the net worth , sufficient experience , past track record .

Asset management company :The Asset Management Company(AMC) is a Non-

Banking Finance Company(“NBFC”) licensed by the Securities and Exchange Commission of
Pakistan (“SECP”) to carry out Asset Management in accordance with Part VIII-A of the
Companies Ordinance, 1984 (the “Ordinance”) and the NBFC & NE Regulations, 2008 . a
firm that invests pooled funds from clients, putting the capital to work through different
investments including stocks, bonds, real estate, master limited partnerships, and more.
 Structure of mutual funds
Trustee : The important link between the working of mutual fund responsible for ensuring that
investors interest in a scheme are taken of properly . A trustee is a person or firm that holds and
administers property or assets for the benefit of a third party. A trustee may be appointed for various
purposes, such as in the case of bankruptcy, certain types of retirement plans or pensions, or to manage
assets for someone.
Distributors :Earn a commission for bringing investors into scheme ,commission is an
expense and he receives it form AMC.
Registrar :Tracks investors holding in an mutual funds scheme he is also known as registrar
and transfer agent , maintain an account of investors investment and disinvestments from the
scheme .
Custodian /depository: Maintain custody of the securities in which the scheme invest ,
ensures the ongoing independent record of the investment of the scheme.