The mutual funds sector remained in flux with volatile investment trends from different segments of investors in 2018, showing a decline of over Rs. 12.5 billion in asset values managed by various companies.
In contrast to the decline in asset values in 2018, the mutual fund sector gained a whopping Rs. 131 billion in assets values of its various funds in 2017 mainly on the back of bullish trend in the equity market, which also gave impetus to funds related to stock exchange.
In 2018, the values of asset managed by different companies reduced from Rs.622 billion to Rs. 609 billion in the outgoing year which even continued to decline even in the starting months of 2019 standing now nearly Rs. 607 billion.
The open-ended mutual funds saw a reduction of Rs. 10 billion in its assets’ values which stood at Rs.563 billion whereas the values of close-ended fund declined to Rs. 19.6 billion by end of 2018.
The number of asset management companies has been reduced to 19 from 20. These companies introduced various open-ended funds in order to retain and attract old and new investors of the mutual fund sector, hence the number of overall funds managed by assets management companies surged to 281.
Equity funds witnessed reduction in the assets values whereas the funds invested in the money market recorded whopping growth in the values of assets.
The number of investors accounts increased to 0.34 million by end of 2018 as compared to 0.30 million. Investors of various categories including corporations, groups, and individuals make investment in mutual funds of different categories.
The aggregate size of the industry stood at Rs. 25 Billion in 2002 which has now grown to around 607 billion, i.e. over US $4billion, spreading over some 275 funds that are managed by 19 asset management companies.
The total assets under management are, however, only 2% of GDP or equal to 6-7% of market capitalization. By way of comparison India’s mutual fund industry stands at US$ 328 billion in size, it is 13.6% of GDP, and around 20% of market cap, whereas in the United States mutual funds aggregate about $ 19 trillion, they are about 70% of GDP, and about 25% of market cap.
According to Chairman Mutual Funds Association of Pakistan, Farid Ahmed Khan:
The mutual fund sector is still in a nascent state in Pakistan and stands poised to grow tremendously given the right kind of support and guidance. The future of the mutual industry is dependent on increasing awareness across the country, efficient means of distribution and innovative product development. The need of the hour is for the industry, the regulator and the government at large to work together for collective and public interest.