In a significant milestone for the financial landscape of Pakistan, Asset Management Companies (AMCs) in the country have witnessed a historic influx of funds, surpassing Rs. 2 trillion for the first time. According to the Mutual Fund Association of Pakistan (MUFAP), individual investors and corporations have played a pivotal role in driving this surge, with high-value investments pouring into various funds offered by AMCs.
As of November 2023, the overall value of funds soared to Rs. 2.025 trillion, marking an impressive increase from Rs. 1.355 trillion reported in the same period last year. This remarkable growth of Rs. 67 billion within a year can be attributed to the allure of lucrative returns offered by mutual funds, reaching around 20 percent—an historically high level, buoyed by elevated interest rates.
The equity market, a key player in this financial upswing, has witnessed funds offering up to 25 percent returns in recent weeks, attracting short-term investments. The mutual funds are categorized into open-ended funds (Rs. 1.966 trillion), voluntary pension funds (Rs. 58 billion), and exchange-traded funds (Rs. 358 million).
Within open-ended funds, those traded in the money market hold a dominant 51 percent share, exceeding Rs. 1 trillion. Income funds from various AMCs have attracted over Rs. 585 billion, securing a 30 percent share till November 2023. Equity market-traded funds reached Rs. 168 trillion with a 9 percent share, while other diverse funds attracted over Rs. 206 billion in investments, capturing a 10 percent share.
Leading the pack is Al Meezan Investment Management Limited with assets worth Rs. 386 billion, followed by NBP Fund Management Limited managing over Rs. 255 billion, and HBL Asset Management Limited at the third position with assets valued at Rs. 194 billion. MCB Investment Management Limited secured the fourth position with assets worth Rs. 168.9 billion. These top-performing AMCs are also listed on the Pakistan Stock Exchange (PSX).
The introduction of a digital account opening facility for both local and overseas investors, coupled with attractive returns on mutual fund investments, has further fueled the influx of funds. From January to November 2023, digital account investments surged from Rs. 1.3 billion to Rs. 5 billion within the country, while investments through RDA rose from Rs. 1.8 billion to Rs. 3.4 billion.
The asset management sector’s remarkable growth in 2023 not only benefits fund managers through increased profitability but also provides investors with attractive returns. Additionally, the government is reaping rewards in terms of withholding tax and CGT, despite the previous coalition government abolishing the incentive tax rebate of up to 20 percent on mutual fund investments last year.
