Mutual Fund in Pakistan – How to Invest

What is Mutual Fund?

Mutual Fund

A mutual fund is a collection of money used by banks or other institutions to buy securities or conduct business. The term is typically used in Pakistan, the U.S., India, and Canada. The principal investment defines the name of a mutual fund: cash fund, index fund, stock or equity fund, and so on. There are also “actively monitored” funds. In other words, a manager actively monitors and trades on behalf of investors.

A mutual fund can be established as a trust or as an investment company. The Asset Management Company creates the trust (AMC). The trustee manages the trust’s assets on behalf of the trust’s unit holders. The mutual fund, on the other hand, is established as a publicly traded company under the investment company structure. The AMC, as the mutual fund’s sponsor, appoints a board of directors to manage its affairs, as well as a custodian to hold all of the investment company’s assets. The SECP licenses an AMC, which allows it to operate the mutual fund and manage its investments.

In Pakistan, people don’t know about any investment ideas. and there is a lack of knowledge among people about how to save and invest money. If you are interested in investing, you can find many options for investment on this blog. In this post, we are going to talk about mutual funds in Pakistan.

How mutual fund Works?

In a mutual fund, money gathered from numerous investors is pooled together to invest in a variety of securities, such as bonds, equities, and/or money market investments. The assets of mutual funds are professionally managed by fund managers, who work to maximize returns for investors.

Below is the video from Meezan Bank – very good illustration of Mutual Funds and how it works.

Mutual Fund Introduction

Types of Mutual Funds

Money Market Funds

Money market funds are funds that invest in the money market. It is a fixed-income security with a very short time to maturity and high credit quality. Investors often use money market funds as cash in bank accounts. It gives a better return with low risk. The bank will profitably invest your money in short-term money market and debt securities. Some of Shariah Complaince Money Market funds in Pakistan [as of Feb 2023] are below

Sr.Fund NameValidity DateNAV YTD
1ABL Islamic Cash FundFeb 01, 20231014.92%
2AL Habib Islamic Cash FundFeb 01, 202310014.77%
3Al Ameen Islamic Cash FundFeb 01, 2023109.16413.93%
4Al Ameen Islamic Cash Plan IFeb 01, 202310014.79%
5Alfalah Islamic Rozana Amdani FundFeb 01, 202310014.91%
6Alhamra Islamic Money Market FundFeb 01, 202399.5115.01%
7Atlas Islamic Money Market FundFeb 01, 202350014.52%
8Faysal Halal Amdani FundFeb 01, 2023101.43415.07%
9Faysal Islamic Cash FundFeb 01, 202310015.43%
10HBL Islamic Money Market FundFeb 01, 2023101.17415.25%
11JS Islamic Daily Dividend FundFeb 01, 202310014.78%
12Meezan Cash FundFeb 01, 202350.987313.91%
13Meezan Rozana Amdani FundFeb 01, 20235014.80%
14NBP Islamic Daily Dividend FundFeb 01, 20231014.87%
15NBP Islamic Money Market FundFeb 01, 202310.1514.20%
16NIT Islamic Money Market FundFeb 01, 2023101.09615.07%
17Pak Oman Daily Dividend FundFeb 01, 20231014.95%
Islamic Mutual Funds (Data Taken from MUFAP)

Bond Funds

These fund invest in fix income or debt securities. And Bonds are not shariah compliant; hence, they are not recommended. Bond funds can be sub-classified according to:

  • The specific types of bonds owned (such as high-yield or junk bonds, investment-grade corporate bonds, government bonds or municipal bonds)
  • The maturity of the bonds held (i.e., short-, intermediate- or long-term)
  • The country of issuance of the bonds (such as the U.S., emerging market or global)
  • The tax treatment of the interest received (taxable or tax-exempt)

Some of Bond Market funds in Pakistan [as of July 2022] are below

  • NIT-Govt Bond Fund (NAV: 9.8814, Return: 13.99%)
  • UBL Income Opportunity Fund (NAV: 111.09, Return 15.58%)
Bond Funds YTD
Bond Funds Yearly Return – July 2022

Stock or Equity Funds

These funds are invested in the stock market or equity market, and a manager is responsible for the sale and purchase of securities. It is a high risk fund but also provides high returns. and these funds closely follow the stock market. If the stock market falls, these funds will also fall. some of shariah compliance equity funds in Pakistan (as of july 2022) are as below

Sr. No.Fund Name Validity Date NAV YTD
1ABL Islamic Stock FundJul 21, 2022    12.67-3.85%
2AKD Islamic Stock FundJul 21, 2022    36.89-8.85%
3AL Habib Islamic Stock Fund (Formerly: First Habib Islamic Stock Fund)Jul 21, 2022    72.09-3.25%
4AWT Islamic Stock FundJul 21, 2022    77.91-3.98%
5Al Ameen Islamic Energy FundJul 21, 2022    85.20-2.13%
6Al Ameen Shariah Stock FundJul 21, 2022  135.48-3.28%
7Al Meezan Mutual FundJul 21, 2022    15.12-3.81%
8Alfalah GHP Islamic Stock FundJul 21, 2022    35.16-4.74%
9Alhamra Islamic Stock FundJul 21, 2022      8.61-5.38%
10Atlas Islamic Stock FundJul 21, 2022  472.26-4.48%
11Faysal Islamic Stock FundJul 21, 2022  101.14-4.00%
12HBL Islamic Equity FundJul 22, 2022    67.46-3.60%
13HBL Islamic Stock FundJul 21, 2022    83.69-5.36%
14JS Islamic FundJul 21, 2022    81.62-3.34%
15Meezan Energy FundJul 21, 2022    30.62-2.87%
16Meezan Islamic FundJul 21, 2022    54.15-3.70%
17NBP Islamic Energy FundJul 21, 2022      8.56-3.02%
18NBP Islamic Stock FundJul 21, 2022    10.14-4.35%
19NIT Islamic Equity FundJul 21, 2022      7.06-4.21%
Yearly Performance – Mutual Funds (Equity)

Other Funds

Funds may invest in Comodities or businesses. some of shariah compliance Income funds in Pakistan (as of July 2022) as below

Sr. NoFund Name Validity DateNAV YTD
1786 Smart Fund (Formerly: Dawood Income Fund)Jul 21, 2022    82.159.31%
2ABL Islamic Income Fund (Formerly: ABL Islamic Cash Fund)Jul 21, 2022    10.3111.77%
3AKD Islamic Income FundJul 21, 2022    51.0013.94%
4AL Habib Islamic Income Fund (Formerly: First Habib Islamic Income Fund)Jul 21, 2022  101.4913.62%
5AL Habib Islamic Savings FundJul 22, 2022  100.0014.14%
6AWT Islamic Income FundJul 21, 2022  105.5612.35%
7Al Ameen Islamic Sovereign FundJul 21, 2022  102.2112.51%
8Alfalah GHP Islamic Income FundJul 21, 2022  103.1212.30%
9Alhamra Daily Dividend FundJul 22, 2022  100.0013.57%
10Alhamra Islamic Income FundJul 21, 2022  102.9112.64%
11Atlas Islamic Income FundJul 21, 2022  510.7412.64%
12Faysal Islamic Savings Growth FundJul 21, 2022  104.6113.23%
13Faysal Islamic Special Income Plan IJul 21, 2022  100.7612.94%
14HBL Islamic Income FundJul 21, 2022  103.6014.17%
15JS Islamic Income FundJul 21, 2022  105.4711.76%
16Meezan Daily Income Fund (MDIP I)Jul 21, 2022    50.0013.56%
17Meezan Islamic Income FundJul 21, 2022    51.9313.32%
18Meezan Sovereign FundJul 21, 2022    52.0513.04%
19NBP Islamic Income FundJul 21, 2022    10.1213.37%
20NBP Islamic Mahana Amdani FundJul 21, 2022    10.1312.80%
21NBP Islamic Savings FundJul 22, 2022      9.6212.12%
22NBP Riba Free Savings FundJul 21, 2022    10.3412.36%
23NIT Islamic Income FundJul 21, 2022      9.4912.73%
24Pak Oman Advantage Islamic Income FundJul 21, 2022    53.2313.88%
Yearly Return – July 2022 (Data Taken From MUFAP)

You can find complete List of Mutual Funds and their performance here

What Mutual Funds to invest in?

First, think about your financial goals and select a fund accordingly. For example, do you want your financial resources to develop steadily and without risk over time? Do you desire the greatest possible returns? These questions need original solutions.

Check the list below to select the best mutual fund

  1. Check the type of Mutual Fund, if it is active and passive mutual fund. How much risk it contains
  2. Check its past performance and evaluate the future performance of the fund
  3. Consider the Mutual fund fee whil selecting the fund. it is one of the most important trait
  4. Below is some questions list you need to ask from Fund Manager
    • How has this fund performed over time? what are it’s returns
    • What is the risk profile of this fund?
    • What is the rating of this fund in MUFAP comparisons for similar funds
    • What are the investment ventures of this funds? if it invest in stocks then what type of stocks it invests in
    • How often does the portfolio updated?
    • What is the fee structure of fund for both purchase and selling units

You should only invest if you are happy with the answers. Before transferring your funds, you should review the offering documents, fund manager’s report, and fund performance on the MUFAP website. Returns are provided for various fund categories for the month, year, and 365 days.

Documents Required for Mutual Fund account Opening

Contact the AMCs or their designated vendors for an application form, or visit their website. When you open an account, you must provide the following information:

  • Copy of CNIC Application
  • Account Opening Form
  • Zakat Affidavit (Optional)
  • FATCA Form/KYC Form
  • Draft Cheque: Payable to the respective trustee by check/pay order/demand draft (make sure to write cheque only in the favor of the respective trustee)

Data given above will help you to select the best mutual fund for you. Happy Investing

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