There is a beautiful Chinese proverb, “The best time to plant a tree was 20 years ago. The second best time is now.”

By investing your money regularly, you may be able to increase it many times over with time. That's why it's important to begin investing as early as possible and as soon as you have some money saved for that purpose. Furthermore, the stock market is a good place to start.

A mutual fund is an investment vehicle that collects money from many investors, and invests the collected pool of money in various investment avenues. The fund itself is managed by experienced professionals, who dedicatedly monitor the performance of the fund and manage it accordingly, on an ongoing basis.

Some of the major benefits of investing in a mutual fund are: → Diversification → Professional management → Liquidity → Affordability → Tax benefits → Convenience → Return Potential → Transparency → Choice of Schemes → Well regulated

Mutual funds are closely regulated by the Securities and Exchange Commission of Pakistan (SECP). SECP's primary purpose is to protect the interests of the capital market investors. Each and every mutual fund comes under the regulatory review of SECP.

An asset management company on behalf of the fund, collects money from many investors, and invests it in various investment avenues like shares, bonds, etc. This fund is managed by professionals who understand the market well, and try to achieve the fund’s investment objective by taking sound investment decisions on behalf of the fund. Investors get units of the mutual fund according to the amount they have invested and the return from investment gets reflected in the price of their units.

A highly regulated financial institution licensed by the regulator (SECP in case of Pakistan) that structures and manages various mutual funds and also provide investment advisory services.

The fee charged by the asset management company (AMC) for managing the fund. This fee is usually quoted on an annual basis and is calculated as percentage of net assets under management.

As per SECP, the categorization of the open-end Collective Investment Schemes (CIS) made on the basis of investment parameters including eligible asset classes with pre-specified risk profile is imperative to enable the investors to make informed decision and to bring uniformity in the mutual funds industry for comparing performance of various open-end CIS. In this regard CIS can be classified as following: Money Market Scheme, Income Scheme, Equity Scheme, Capital Protected Scheme, Fixed Rate / Return Scheme, Fund of Funds Scheme, Aggressive Fixed Income Scheme, Balanced Scheme, Asset Allocation Scheme, Index Tracker Scheme, Commodities Scheme, Shariah Compliant Schemes.

Open End 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.

A voluntary pension is a pension scheme run by a Pension Fund Manager who manages the voluntary contributions made by a participant, whether employed or not, or by an employer on his behalf.

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. For instance, the Central Depository Company (CDC) and Digital Custodian Company (DCC) are mostly the custodians for most fund houses in the country.

A fund’s Net Asset Value (NAV) represents the value per unit. The NAV is equal to the market worth of assets held in the portfolio of a Fund, minus liabilities, divided by the number of units currently issued to investors. NAV Per Unit = (Current Market Value of all the Assets – Liabilities) / Total Number of Units Outstanding The sales and redemption price of units might be different from the NAV if there is an element of “Sales Load / Front End Load” or “Back End Load”. The sale and redemption price is declared on a daily basis by the funds and can be viewed on their websites.

Offer Price is the price that an investor pays when he purchases a unit. It is equivalent to the NAV per unit plus the applicable sales load. Redemption Price is the price that an investor gets when he sells his units to the fund.It is equivalent to the NAV minus back-end / redemption charges (if any).

Sales Load/Front-End Load is a small service fee charged to an investor when buying or redeeming shares in a mutual fund. The fee compensates sales team for their efforts and is mandatory to be disclosed before any payment is made. Back-End Load is charged when customers withdraw money from funds. This is rarely used and is applied only in case of funds that have a “lock in” period. Again, it is mandatory to disclose the fee before a customer signs up for the product.

A benchmark is a standard against which the performance of a security, mutual fund or investment manager can be measured. A Mutual Fund’s performance is compared with the benchmark in order to find out whether the fund performed better than the market

A Trust Deed is the constitutive document on which the fund is based. The Trust Deed is executed between the asset management company and the trustee. The Trust Deed sets out all the relevant operational and managerial procedures by which the fund will be managed. The Trust Deed is a public document and can be viewed by any prospective investor.

A “Prospectus” or an “Offering Document” is a legal document, approved by the Securities & Exchange Commission of Pakistan which highlights details about the mutual fund for the benefit and knowledge of potential investors. It provides information about a mutual fund covering its establishment, investment strategy, borrowing restrictions, trustee’s profile, auditors’ profile, risk profile, expense profile, management company profile, procedures relating to purchase / redemption / conversion of units, fees / charges payable by investors, fees payable by the mutual fund, mode of unit price announcement etc. in order to facilitate informed decision making by potential investors.

FMR is a Fund Manager Report that is prepared on a monthly basis and placed on the company’s website. The FMR contains a synopsis of each fund’s performance in the previous month and other relevant details regarding the funds.

Islamic funds are different from conventional funds in following ways: Presence and careful monitoring by the Shariah Board It is ensured that all aspects of the Shariah are adhered to before, during and after an investment is carried out in a Shariah Compliant manner. Well defined and Specific Investment Avenues Investment avenues are limited to those that comply with the Shariah. Charity and Purification Any investment/financing that is deemed to have an element of Riba becomes liable for Purification and has to be given away as charity. Asset Ownership The ownership of an asset lies with the party that provides financing and bears the risk e.g. financing by a bank, and assumption of all the risk (non recovery, etc) associated with it. Permissible transactions Transactions have to be conducted according to the Shariah, e.g. no short sales. Islamic Investment in only Shariah Compliant Avenues For Islamic mutual funds and other Islamic Investors, investment can only be made in those securities (equity, debt, etc) which comply with well defined screening ratios.

According to Section 63 of the Income Tax Ordinance, 2001, an individual Pakistani who holds a valid CNIC/NICOP can claim tax credit at average rate of tax on investments made in voluntary pension schemes. For details, visit our tax savings calculator. To claim your tax rebate, simply share your investment statement with your HR department to make the required adjustments.

Copy of CNIC, Copy of NTN, Business / Employment proof, Zakat Declaration (where applicable) FATCA form, Copy of Form B, KYC Details, CRS Form, Risk Profiling questionnaire, Copy of Pension Fund Account Statement (In case of transfer from another pension fund manager), Employer Contribution Form (In case of contribution by employer) and Health Questionnaire Form for free Takaful coverage.

There is a beautiful Chinese proverb, “The best time to plant a tree was 20 years ago. The second best time is now.”

There is a beautiful Chinese proverb, “The best time to plant a tree was 20 years ago. The second best time is now.”

There is a beautiful Chinese proverb, “The best time to plant a tree was 20 years ago. The second best time is now.”