A mutual fund is a trust based structure between Trustee and Management Company that collects money from many investors by selling units, and invests funds into investment avenues on behalf of unit holders with a view to increasing the underlying value of their investment portfolio.
Mutual funds, run by licensed AMCs, operate under a trust structure. An independent trustee manages funds and investments based on AMC advice, adhering to the legal “Trust Deed” framework. This ensures regulatory compliance and protects investor interests.
Pakistan’s Securities & Exchange Commission (SECP) regulates non-banking firms like AMCs and Mutual Funds. Empowered by law, SECP safeguards investors by setting rules and monitoring compliance through regular reviews.
The Trustee holds assets on behalf of the fund in a Trust and works to safeguard the rights of investors. Trustee can be a custodian as well by taking the physical possession of all securities purchased by the mutual fund, and undertakes responsibility for its handling and safekeeping.
A highly regulated financial institution licensed by the SECP (Regulator) that structures and manages various mutual funds. The fee charged for managing funds is the Management Fee. This fee is quoted annually and is calculated as a percentage of net assets under management.
A Trust Deed, outlining fund operations and publicly available, serves as the foundation for an investment fund. Established between an asset manager and a trustee, this document dictates all fund management procedures.
Open funds continually create new units or redeem issued units on demand. The unit holders can buy the units of the fund or may redeem them on a continuous basis at the prevailing Net Asset Value (NAV) by simply contacting the AMC.
SECP categorizes Open-End CIS based on risk and asset class to help investors choose and compare funds. This system sorts them into Equity, Asset Allocation, Fund of Fund, Money Market, Income, Aggressive Income, and Fixed Return schemes.
Mutual funds offer a powerful combo: diversification, pro management, and affordability, reducing risk while potentially boosting returns. Choose from flexible, tax-advantaged schemes with clear transparency. It’s convenient, liquid, and opens doors to a variety of investment options.
Shariah Advisory ensures the compliance of operations and investments with Islamic principles. At Alfalah Investments, we draw guidance from the Shariah Supervisory Board comprising of world renowned Islamic scholars.
