Mutual Funds Association of Pakistan (MUFAP) held its Yearbook 2018 launch at a local hotel in Karachi. The SECP Policy Board Chairman, Khalid Mirza, was the chief guest at the occasion. MUFAP is the trade association representing Pakistan’s asset management industry comprising of 19 Asset Management Companies managing 281 Funds (in conventional and Shariah compliant range) with total assets under management (AUMs) of PKR 607 billion as of January 31, 2019.
Chairman MUFAP, Farid Ahmed Khan, while inaugurating the event highlighted that the mutual funds industry has played an important role in improving the savings rate and is committed to improving this further. He said that the mutual funds industry in most developed markets is recognized for its role in the economy as a seamless conduit to asset markets, such as debt and equity, both public and private – in Pakistan, the industry is still in a nascent state 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. It is also imperative that the taxation and pricing issues are resolved at a fast pace so that unnecessary time and resources are not spent on dealing with these but rather spent productively on the growth and development of the industry. He further added that the industry needs a level playing field with other savings avenues such as National Savings Schemes in order to prosper.
Speaking at the event, Chairman SECP Policy Board, Khalid Mirza highlighted about specifically about mutual funds, “The aggregate size of the industry that was Rs. 25 Billion in 2002 and has now grown to around 600 billion, i.e. over US $4 billion, which is spread over some 275 funds that are managed by 19 asset management companies. The total assets under management are, however, only 2% of GDP or equal to 6-7% of market capitalization.
By way of comparison I might mention that India’s mutual fund industry is US$ 328 billion in size, it is 13.6% of GDP, and around 20% of market sap, whereas in the United States mutual funds aggregate about US $ 19 trillion, they are about 70% of GDP, and about 25% of market cap. I sincerely believe it is incumbent on our policy makers and regulators to adopt a progressive and enlightened view on mutual funds and to take such measures as are necessary so as to enhance the effectiveness of the industry as an important pillar of the financial system. “He said.
There will always be constraints and issues of mutual fund managers are competent, they will know how to deal with difficulties and make progress but if they are no, they won’t. Mutual funds must target retail investors. if they are to play their proper role. Actually, with banking spreads being around 6 °/o and mutual fund fees being 1/2 to 2°/o, mutual fund managers have room to maneuver.
Regulators must pro-actively encourage innovation and development of new product to provide depth to the capital market. Furthermore, they must encourage the promotion of mutual funds and other collective investment vehicles based on such new products as well as asset classes like derivatives, commodities or real estate. They must also encourage viable schemes to extract value from special situations that can be rolled out for investment by retail investors through the mutual fund structure.
MUFAPs key roles amongst others includes: (i) contribution to a strong national economy by encouraging savings and improving the opportunities for achieving financial independence, (ii) encouraging adherence to high ethical standards by all industry participants, (iii) advancing the interests of funds and asset managers and (iv) promoting public understanding of mutual funds, voluntary pension schemes and advisory services.
MUFAP’s Yearbook is an annual publication which contains industry data and statistics along with significant developments in the industry. The first publication was published in 2010 and over the years, the yearbook has significantly enhanced its quality and information available and has established itself as a reliable source of information about the industry statistics and developments in the mutual fund and private pension industries. MUFAP’s commitment to providing timely and accurate data to industry participants and the public while maintaining quality is the key to a successful publication.