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F.A.Q

What is an Asset Management Company (AMC)?
What is a mutual fund?
What is the SECP?
What types of funds are available in Pakistan?
What categories of funds are available in Pakistan?
Are mutual funds insured?
What are the factors that influence the performance of Mutual Funds?
What kind of risk is involved with mutual funds?
What are loads?
As a new investor how do I select a particular scheme?
What is a Unit?
How are units priced?
Why should I invest in mutual funds?
Are there any Tax benefits?
Can investors buy units jointly?
How secure is my investment with POAMCL?
Where from can I get forms?
How do I apply for redemption of units?
Will zakat be deducted at source?
Can a Unit Holder convert the Units from one Fund to another?
Can a Unit Holder convert the Units to another investor/account holder?

What is an Asset Management Company (AMC)?
An Asset Management Company (“AMC”) is a specialized financial institution that provides asset management services to both institutions and individuals. In Pakistan, AMCs are licensed and regulated by the Securities and Exchange Commission of Pakistan (SECP) under the Non-Banking Finance Companies Rules, 2003 and Notified Entities Regulations, 2007.
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What is a mutual fund?

A mutual fund is an investment vehicle comprising a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments, securities, treasury notes and other capital markets instruments. In Pakistan, Mutual funds are legally established in the form of a Trust, under the Trusts Act of 1882 (preferred & new system) or a company formed under The Companies Ordinance 1984 (old system). All assets of the mutual fund are held by an independent trustee and the AMC only serves as a portfolio manager for the mutual fund.
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What is the SECP?
The Securities and Exchange Commission of Pakistan (SECP) was established under Securities and Exchange Commission of Pakistan Act, 1997, with a mandate to regulate the corporate sector, capital markets, insurance companies and other non-banking finance companies. The SECP has oversight of various external service providers to the corporate and financial sectors, including chartered accountants, credit rating agencies, corporate secretaries, brokers, surveyors and other related entities.
The predecessor to the SECP was the Corporate Law Authority (CLA).
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What types of funds are available in Pakistan?

What is an open-end fund?
What is a closed-end fund?

Open-end Funds:
Continually issue new units and redeem outstanding units on investor request. The unit holders buy units of the fund and may redeem them at the published Net Asset Value (NAV). Typically, these funds have a perpetual lifespan. The asset management company launches the fund and continues to remain the counter party in the sales and purchase transactions with the unit holder, as in if the investor wishes to buy or sell units of the fund they contact the AMC which then submits the information to the Trustee.

Closed-end Funds:
Fixed number of share certificates issued by the fund, the units trade in the stock markets. Market price of the unit certificates is determined by their demand and supply and they are not necessarily traded at the NAV. Though many of these funds have a perpetual lifespan, others have a limited lifespan. The asset management company launches the fund and no longer remains the counter party in the sales and purchase transactions with the unit holder, so when an investor wishes to buy or sell units of the fund they have to find a buyer or seller on the stock exchange.

What categories of funds are available in Pakistan?

Money-Market Funds:
The aim of Money Market Funds is to provide easy liquidity, preservation of capital and moderate income. These schemes generally invest in safer short-term instruments such as Treasury Bills, Certificates of Deposit, Commercial Paper and Inter-Bank Call Money. Returns on these schemes may fluctuate depending upon the interest rates prevailing in the market. These are considered very low risk schemes.

Fixed Income Funds:
These funds primarily invest in securities that offer a fixed-return such as bank deposits, treasury bills (T-bills), term-finance certificates (TFCs) and other money market instruments. In comparison to equity funds, the element of risk is low and so is the return.

These funds carry a minimum level of risk and provide competitive returns based on an underlying fixed-income portfolio.

Equity Funds:
These funds invest in the domestic equity markets. Traditionally Equity Funds have produced returns greater than Fixed Income and Money Market funds, however they have a much greater risk attached to them and can experience negative returns. They are generally highly correlated with the stock index and benchmarked with the KSE 100.

Balanced Funds:
These funds carry a mix of equity and fixed income securities in their portfolio. The element of risk is moderate and t tends to be better than fixed- income funds because of the equity component in their portfolio. There is usually a minimum allocation for asset classes covered by the fund.

Asset Allocation Funds:
These funds invest in a mix of equity and fixed income securities. Unlike balanced funds, these funds are aimed at taking advantage of shifts in macro-economic trends by investing in asset classes that are projected to gain the most. There is no minimum allocation for asset classes.

Fund of Funds:
These funds invest in other mutual funds.

Islamic Funds:
These funds invest in Shariah Compliant instruments and securities

Islamic Fund of Funds: These funds invest in other Islamic mutual funds.
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Are mutual funds insured?
Mutual funds by virtue of their portfolio investments (listed and trade-able securities and instruments) are market driven, and are not insured in Pakistan. However, globally some mutual funds are in fact insured (80% or 70% of portfolio value), currently these funds are not offered in Pakistan
However, several AMC’s now offer capital protected funds. Special Managed Accounts (“SMA”)s can build a protected portfolio for investors with a minimum investment of PKR 5 mn.
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What are the factors that influence the performance of Mutual Funds?
The performance of a mutual fund is directly influenced by its portfolio investments. For example, the performance of an equity fund is the result of its investments in stocks, and hence is influenced by the performance of the stock market and in particular the stocks in the portfolio.
Interest rates and the credit quality influence the performance of Income Funds. As interest rates fall, prices of underlying securities rise and vice versa thus affecting the value of the portfolio.
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What kind of risk is involved with mutual funds?
Investments in Mutual Funds are subject to market risks. The value of the units may go up or down based on the investment portfolio of the fund and market conditions. A fund that aims to achieve a high level of growth will be more volatile than one whose objective is to preserve the original capital. Complete details regarding the risk associated with the investment in the fund are provided in the offering document
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What are loads?
Open-end funds recover a sales charge (called sales load) from unit/ share holders. Sales load is a certain fixed percentage of Net Asset Value per Unit. Some mutual funds recover the sales load when investors purchase the units (Front End Load), whereas others do when investors redeem (encash) the units (Back End Load). Mutual funds generally do not charge sales load on reinvestment of dividend. The shorter the period of investment, the greater will be the impact of the sales load. Maximum benefit can be derived from mutual fund investment by regularly investing, reinvesting the dividend and holding the investment for a longer period.
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As a new investor how do I select a particular scheme?
Choice of any scheme would depend to a large extent on the investor preferences.
Investors interested in: Should invest in:

High return and high risk Equity Funds
Regular Income & Capital stability (low risk & medium to long term horizon) Income Funds
Regular Income & Capital stability (low risk & short-term horizon) Money Market Funds

An important aspect while selecting a particular scheme is the duration of the investment. Depending on your time horizon you can select a particular scheme. Besides all this, factors including management quality, sponsor background, objective of the fund, independent rating, and returns given by the funds on different schemes should be taken into account while selecting a particular scheme.
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What is a Unit?
“Unit” means one undivided share in the Trust. Each Unit Holder has a beneficial interest in the Scheme proportionate to the Units by such Unit Holder.
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How are units priced?
The unit is priced based on the NAV (net asset value). Normally units are offered to the public at a price equal to NAV per unit plus sales load. The sales load is a certain %age of NAV per unit.
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Why should I invest in mutual funds?
Mutual funds are an easy, convenient and affordable way of gaining access to capital markets. Each investor has a stake in the assets and earnings of the fund in proportion to the amount of their investments. The benefits of mutual funds include:

• Professional Management:

The AMC appoints a team of investment professionals, assisted by qualified research analysts, to manage the portfolio of the fund in conformity with the Investment Objective of the fund.

• Diversification:
Mutual Fund portfolios usually consist of multiple investment positions/vehicles across sectors and companies, and are thus better able to mitigate risk by virtue of the their diverse portfolio. In short, a mutual fund does not put “all its eggs in one basket” instead it invests in many securities, some of which may rise while other may fall. This reduces the risk an investor faces while investing in one or two securities.

• Liquidity:
Liquidity is the ability to readily access your money in an investment. Open ended mutual funds provide a unique opportunity to investors in liquidating their investment at a redemption price determined through the NAV methodology. In Pakistan, the investor can get his/her money back within six business days of the redemption date.

POAMCL Funds generally strive to provide redemption proceeds within 2 to 3 business days.

• Reduction of transaction costs:
A direct investor bears all the costs of investing such as brokerage costs, and custody of security costs. When going through a fund, you have the benefit of economies of scale; the fund pay lesser costs because of larger volumes, a benefit passed on to its investor. Costs including but not restricted to Technology Infrastructure, Investor Services, Research, let al are borne by the management company, in this case POAMCL.

• Convenience:
Investors can choose for automatic reinvestment or periodic distribution of the earnings of their units in the fund. Further, the investors don’t need to open CDC Accounts or to transfer their units through a brokerage.

Mutual funds also offers a wide variety of services including account statements at any time on the investors request, , dedicated investor support and designated Investment Centers for added convenience. Investors can also switch from one fund to another at any time.

• Time:
Generally an investor does not have the time to actively manage portfolios. We are POAMCL Funds have a team of dedicated professionals who are relentlessly researching and analyzing stocks, visiting companies to meet management, determining business cycle ups and downs, studying macroeconomic trends, forecasting interest rate fluctuations and interpreting fiscal as well as monetary policy measures to see how they affect the movement of securities.
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Are there any Tax benefits?
An investment in any POAMCL Fund will also allow an individual to lower what they pay in taxes. The applicable tax laws provide for tax credit incentive to salaried investors and self-employed investors.

The salaried investor can claim the tax credit (up to PKR 60,000 per year) by providing proof of investment in the form of a Mutual Fund accounts statement to the company’s payroll department when their salary is paid.

The self-employed investor can also avail themselves of the tax credit (up to PKR 75,000 per year) at the end of the year when they file their taxes.

Investors are advised to consult their tax advisor prior to making an investment decision.

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Can investors buy units jointly?
Yes. However, this requires a joint account.
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How secure is my investment with POAMCL?
Mutual funds are regulated by the Securities and Exchange Commission of Pakistan which is a government regulatory authority. There are several entities involved in the operations of a mutual fund, each with its own mandate and specialized function to safeguard investor interests as well as enforce and set rules to maximize investor interests.

Three separate and independent entities ensure transparency and compliance with applicable rules and regulations to safeguard the interest of investors. These independent entities include:

The Securities & Exchange Commission of Pakistan (SECP)
The Auditors
The Trustee
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Where from can I get forms?
The forms can be downloaded from the web site and are also available from Branches Offices of POAMCL. You can make a call to us on these nos : (+92-21) 5631020-4 and the forms will be sent to you on the same day.

If you have any difficulty while filling in the forms, you can again call us at UAN # +9221-111-762-625 (POAMCL) and we will help you on the phone or send our Sales Staff to help you.

The forms can be submitted to any of the Branches Office or to the Management Company during business hours (9 a.m. to 3:30 p.m.) on a Dealing Day (Monday to Friday every week).
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How do I apply for redemption of units?
Request for redemption can be made by completing and submitting the prescribed Redemption and endorsing the relevant Unit Certificate, if issued. Unless requested, the unit certificate is not issued and the investor simply gets an account statement. In such cases, the applicant has only to complete the prescribed Redemption Form. The request for redemption would be honored after verifying the signature and other particulars of the Unit Holder.
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Can a Unit Holder convert the Units to another investor/account holder?
A Unit Holder may transfer any Units held by that Unit Holder to any other Account Holder by submitting a properly filled form.
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Can a Unit Holder convert the Units from one Fund to another?
A Unit Holder may convert the units in one Fund into units of another Fund managed by the Management Company by submitting a properly filled form. The Registrar Agent Agent shall carry out the conversion after satisfying that all the requisite formalities have been fulfilled and payment of the applicable taxes, fees and/or load, if any, has been received.

While transferring from a ‘no load’ to a ‘load’ fund or from a ‘low load’ to a ‘high load’ fund, a sales load may be charged the first time you make such transfer. No sales load will be charged on transfers from a ‘high load’ fund to a ‘low load’ or a ‘no load’ fund or on subsequent transfers of funds.Separator

Will zakat be deducted at source?

Yes, zakat will be deducted at source unless Zakat declaration form is submitted with the registrar or management company.




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