Industry History


National Investment Trust Limited (NIT) established and launched its first open-end mutual fund National Investment (Unit) Trust in Pakistan on November 12, 1962.


Investment Corporation of Pakistan (ICP) established to broaden investment base and develop capital markets in the country. From 1966 onwards, ICP floated twenty-six closed-end mutual funds.


Investment Companies and Investment Advisers Rules were notified. Private sector was allowed to float closed-end funds under these Rules.


First closed-end fund (Golden Arrow Selected Stock Fund) in the private sector was launched on May 1, 1983.


First meeting of investment advisors / asset management companies held for the establishment of Mutual Funds Association of Pakistan (MUFAP).


Asset Management Companies Rules, 1995 were notified allowing launching of open-end funds by the private sector.


Unit Trust of Pakistan, first private sector open-end fund launched by JS Investments Limited (formerly ABAMCO Limited) on October 27, 1997.


SECP was established under the Securities and Exchange Commission of Pakistan Act 1997 and became functional as a body corporate on January 1, 1999. SECP replaced the Corporate Law Authority.


National Savings Scheme revisited; rate of return was reduced, income from NSS was subjected to income tax and limit was placed on institutional investment. This helped the mutual fund industry grow. SECP gave more Private Sector asset management companies’ licenses. These were to Arif Habib Investment, Al-Meezan Investment and UBL Funds.


MUFAP officially incorporated and recognized as representative body of asset management companies in the country.


Government sold the management rights of closed-end ICP mutual funds, through open bidding to private sector asset management companies. Lot-A comprising of 12 funds was acquired by ABAMCO, now JSIL, whereas Lot-B comprising of 13 funds was acquired by PICIC, now merged into HBL. First fixed income securities fund (Pakistan Income Fund) was launched on March 11, 2002 and first open-end Shariah Compliant Fund (UTP - Islamic Fund now JS Islamic Fund) was launched on December 27, 2002.


Non-Banking Finance Company (NBFC) Rules, 2003 were notified, terminating the previously applicable Asset Management Companies Rules, 1995 and Investment Companies and Investment Adviser (IA) Rules, 1971. NBFC Rules, enabled both closed-end and open-end funds to be governed under same rules and removed many anomalies. NBFC Rules also allowed closed-end funds to be established under trust structure in addition to company structure. The management rights of ICP State Enterprise Mutual Fund (SEMF) were sold through open bidding. This was acquired by PICIC, now merged into HBL.


MUFAP obtained membership of International Investment Funds Association (IIFA).


Voluntary Pension System Rules, 2005 were notified.


SECP issued licenses to four Pension Fund Managers to launch individualized pension schemes. To date seven more licenses were issued raising the number of pension fund managers to eleven. MUFAP hosts 12th Asia Oceania Regional Meeting of IIFA, attended by heads of respective associations of Japan, Australia, Philippines, Taiwan, China, Hong Kong, Bangladesh and India.


Non-Banking Finance Company (NBFC) & Notified Entity (NE) Regulations, 2008 were notified.


MUFAP developed a model for TFC pricing, based on actual transactions and matrix that took into consideration various factors, like rating, maturity and rate of profit. The pricing methodology was implemented after SECP approval. SECP in consultation with MUFAP introduced the proper categorization of funds through Circular 7 of 2009 where investment avenues are defined for each category in terms of their risk profile. Subsequently, Money Market Funds were introduced, designed to manage short term liquidity and are considered to be the least risky amongst the different types of mutual funds.


MUFAP and Karachi Stock Exchange worked together to launch Bond Automated Trading System (BATS) for trading of Corporate Debt Securities. Performance in respect of return of all mutual funds and pension funds was added as new feature on MUFAP Website. The daily returns, as well as return for various periods up to previous three hundred sixty five days are daily updated on MUFAP’s website. MUFAP started printing Yearbook and Quarterly Newsletter. These publications include important information about industry, including ten years data and industry’s issues.


MUFAP, in consultation with its members, developed and submitted a Five Year Comprehensive Plan for the development of Mutual Funds to SECP. MUFAP conducted a public awareness campaign to educate the investors about the benefits of money market funds. SECP mandated Distributors of Mutual Funds to register with MUFAP as Registered Service Providers.


MUFAP issues Code of Conduct and Qualification for Registered Service Providers. SECP issues directive which included restricting Management Fee sharing with Unit Holders. SECP issues Debt Trustee Regulations, 2012. SECP approves regulations for Exchange Traded Funds.


SECP notified “Commodity Scheme” as a new asset class/category for Collective Investment Schemes. Investments in commodities were also allowed in Balanced and Asset Allocation funds.Subsequently, a new sub-fund for voluntary pension schemes ‘gold sub-fund’ was also launched.<br/> Four Closed-end funds were converted to Open-end and five closed-end funds were converted / wound up in the following year as per the Regulation 65


SECP issues Advertisement Guidelines for all forms of advertisements whether electronic or print material. Cash Distribution made mandatory by Government for Mutual Funds.


First formal REIT Management Company came into existence this year. With reference to regulatory requirement for RMCs, SECP issued Real Estate Investment Trust Regulations, 2015. Through the amendments in the Finance Act 2015, Mutual funds and REIT Scheme, have been excluded from the definition of ‘industrial establishment’ subject to Workers’ Welfare Fund (WWF) under the Workers’ Welfare Fund Ordinance, 1971 (WWFO).


Sindh High Court passes Judgment in the FED case filed by asset management companies down the FED federal component. SECP introduced the standardized calculations and disclosure requirement for total expense ratio for mutual funds. SECP introduce amendments in the NBFC Rules 2003 and NBFC & NE Regulations 2008.


SECP allows charging of marketing and selling expenses to the funds to those asset management companies (AMCs) intending to increase their branch network as per the schedule provided by SECP. Companies Act 2017 introduced which replaces the Companies Ordinance 1984. SECP approved change in accounting treatment of element of income to bring it in line with IFRS.


SECP amends circular to allow charging of selling and marketing expenses to all categories of funds (except money market & fund of funds) at all branches at all cities. SECP notifies the Employee's Contributory Funds (Investment in Listed Securities) Regulations 2018. SECP notifies Anti-Money Laundering and Countering Financing of Terrorism Regulations 2018.


SECP notifies amendments in the NBFC Regulations 2008, removing all sub caps within the Total Expense Ratio, enhancing scope of selling and marketing expenses to include technology and alternative delivery channels, and reducing the SECP's annual monitoring fee significantly. SECP notifies amendments in the REIT Regulations 2015 easing the process and removing the major obstacles in launching and managing REIT Funds.


SECP issued Master Circular for Mutual Funds, consolidating all existing, applicable circulars, directions and clarifications in one document.


MUFAP was issued a license under Section 42 of Companies Act,2017 on June 29, 2021 by the Securities and Exchange Commission of Pakistan, which is the first step towards converting into a Self-Regulatory Organization (SRO) for the mutual fund industry in Pakistan. MUFAP received clarification from Sindh Revenue Board that Mutual Funds and Voluntary Pension Schemes do not qualify as Financial Institutions / Industrial Establishments and thereby are not liable to pay Sindh Workers Welfare Fund. Subsequently on August 13, 2021, the provisions were reversed resulting in a one time non-recurring gain to the funds' Net Asset Values.


The Federal Government, via Finance Bill 2022, has deleted Section 62 in the Income Tax Ordinance, 2001 pertaining to the availability of tax credit for mutual funds. SECP has introduced Fixed rate/Return Scheme as a new category of Collective Investment Scheme. Securities and Exchange Commission of Pakistan (SECP) vide circular No. 28 of 2021 (dated October 7, 2021) has specified criteria for digital account opening for Pakistani individual customers and /or Pakistan origin (POC) holders. After representation of MUFAP, further amendments were made in the same via circular No. 32 of 2021 dated December 8, 2021. To facilitate investments in mutual funds through Roshan Digital Accounts (RDA), the SECP removed the requirement for banks to obtain a license for distributing mutual funds through RDAs. This relaxation has been granted to facilitate overseas Pakistanis to invest in mutual funds and pension funds managed by AMCs. Later in the year the SECP also approved the process flow for investments in Voluntary Pension Schemes by Non-Resident Pakistanis (NRPs) through RDAs. The State Bank of Pakistan subsequently amended the Foreign Exchange Manual to allow investments in VPS through RDAs.


SECP introduced the concept paper on Digital Asset Management Companies (AMCs) and is currently testing the Digital AMC. Centralized Gateway Portal launched by CDC with SECP’s approval to facilitate digital onboarding of investors. KPK Government introduced Pension Reforms and signed up with VPS Managers to launch KPK Pension Funds for their employees.