The Securities and Exchange Commission of Pakistan (SECP) has allowed insurance companies to invest in open-ended mutual funds including Exchange Traded Funds (ETFs) to encourage the participation of insurance companies in the ETF market,.
After these new amendments to the Insurance Rules, 2017, the insurance companies have now been allowed to invest 10 percent of their total investments in any one open-ended mutual fund including units of ETF. If insurance companies choose to invest in a mutual fund and ETF, managed by the same Asset Management Company (AMC) they may invest a maximum of up to 15 percent of their total investments.
Furthermore, if insurance companies already have investments with an AMC, they may also invest an additional 5 percent of their total investments in ETFs offered by that AMC.
The insurance companies’ participation in the capital market, as institutional investors, will strengthen Pakistan’s capital market. The SRO1011(I)/2022, to effect amendments to the Insurance Rules, 2017 and to notify the admissibility limits for investment in the ETFs, has been placed on SECP’s website.