The investment in different mutual funds witnessed a handsome growth which surged the assets values of assets management companies to an all-time high level of Rs. 1.2 trillion by the end of June 2022.
According to the data released by the Mutual Funds Association of Pakistan (MUFAP), the values of various fund managers grew by Rs. 125 billion in the last six months compared to December’s values which stood at Rs. 1.089 trillion.
The growth in investments and assets values was mainly driven by the high rate of return amid a low risk of losses.
The assets value of the mutual funds under the category of money market recorded a consistent growth to reach Rs. 446 billion. This is because the trend of investment has increased in funds of the money market at a time when the policy rate has surged to 15 percent.
The profit rate offered by funds managers varies from 12 to 14 percent at present on conventional and Islamic mutual funds. Not only fresh investment witnessed inflows in this segment but investors are also moving from uncertain trading sessions of the Pakistan Stock Exchange (PSX) to mutual funds to book fixed-rate or secure profit margins on their savings and investments.
There are over 275 funds of assets management companies including interest-based and Shariah-compliant. The areas of the funds include money market, income, equity, balanced, capital protected, assets allocation, balanced, fund of funds, commodities, etc.
Various asset management companies are subsidiaries of the commercial banks or have a significant shareholding of the banks and financial institutions.
The investments in mutual funds usually come from individual investors, the corporate sector, associations, and institutions.
In the current financial year, the government has abolished the incentive of tax credit for the investors of mutual funds against a certain amount. However, the investment in these funds witnessed continuation owing to high-profit rates offered by asset management companies.
Besides mutual funds, the assets values under pension funds surged to Rs. 40.9 billion from Rs. 38.9 billion in the last six months. The asset values of exchange trade funds decreased to Rs. 189 million from Rs. 199 million till June 2022.
the equity based mutual funds are still in turmoil state and their values are very pathetic and almost 30 percent declined since june 2017 when PSX index was trading at 52,800 points so it is very discouraging for those investors who invested in year 2017 are still waiting for recovery of their investments in equity funds.