Mutual Funds; The future

of investment in Pakistan?
SPONSORED BY: AL MEEZAN INVESTMENT MANAGEMENT LTD.

Sponsors: Al Meezan Investment Management Ltd.

Liaison: Mr. Mohammad Asad (SEVP and Chief investment officer)

Office: 1st Floor, Block C Finance Trade Center, Sharah-e-Faisal, Karachi,

74000, Pakistan

Faculty Support

Advisor: Dr. Mohammad Nishat (Associate Dean, IBA karachi)

Coordinator: Asad Ilyas (Chairperson Accounting and Finance)

Group Detials

General Look at the Pakistani

Economy

Source: Economic watch

GDP (Constant Prices) is PKR 6,240.06 Billion.

GDP Growth (Constant Prices) is 3.505 %.

GDP (Current Prices) is PKR 23,229.79 Billion

GDP Per Capita (Current Prices) is PKR 127,228.00

Inflation (End of Year Change %) is 9.018 %.

Population is 182.584 Million .

Total Government Net Debt is PKR 14,120.37 Billion.

The 40-44 age bracket was predominant

among the most affluent.
Pakistan has a substantial middle class which
consisted of 12.3 million households in 2011

Investment and Saving for Pakistan in

2013

Pakistans savings ratio declined steadily during the review period, dropping from 6.0% of disposable income in 2006 to
4.7% in 2011.

In India and Indonesia there is also a younger middle class so there is

greater emphasis on education and technology. Therefore, businesses
need to adopt multiple business strategies for different regions.

There has also been a shift from basic necessities to discretionary items

Pakistans equity market has been one of the best performing markets of
the region with a growth of 49% in Calendar year 2013. (Balancing quest -inching
towards recovery, Mar 2014 )

About Mutual Funds in Pakistan

Banking Deposits and GDP

- YoY growth (RHS)

- % of GDP

Source: Monetary policy information Compendium 2014

Financial Stability Review H1-FY13. SBP

Financial Stability Review H1-FY13. SBP

Industry-wide - Net Assets(FY 2014 Q2)

2%
5%

Open end funds

Closed end funds
Pension

93%

In Pakistan as per SBP report as at

June 31,2014

REGIONAL COMPARISON-ASIA

REGIONAL COMPARISON-ASIA & PACIFIC

Australia

China

China

India

India

Japan

Japan

Korea, Rep. of

Korea, Rep. of

Pakistan

New Zealand

Philippines

Pakistan

Taiwan

Philippines
Taiwan

TOTAL NET ASSETS IN U.S. DOLLARS

Source: Industry update by IGI Investment bank.

Asset Manager

Fund Size as at
No. of open
Dec 2013
Industry share
Funds
(in PKR bn)

National Investment Trust Limited

61.58

16.70%

Al Meezan Investment Management LTD

12

48.01

13%

National Fullerton Asset Management Ltd

14

41.79

11.30%

Arif Habib Investment Ltd ( subsidary MCB)

16

39.02

10.60%

UBL Fund Managers Ltd

19

36.11

9.80%

 Pakistans

mutual funds industry grew

at a compound annual growth rate
of14.45% from 2004 to 2013.

Net assets grew from PKR 93.82bn in

2004 to PKR 335.23bn in 2008.

The industry has still not grown to its

potential because of the following
challenges.

Lack of awareness of mutual funds among retail

investors and their reluctance invest.

A small distribution network and accessibility to

retail investors.

Hardly any advertisements by AMCs can be

seen.

A very small sales force compared to banks.

The Main Objective/Task

The main objective of this research is to gauge

the competitive landscape of the mutual
funds industry in Pakistan and possible
opportunities in the market for mutual funds.

Broad areas of research

Investor preferences

Investor awareness

Investor perception

Sharia-compliance

Opportunities for banks

Customer satisfaction survey

Trends of mutual funds growth in Mutual funds vs other investment

Pakistan
avenues

International scenario

Methodology to execute the project

Both qualitative and quantitative methods to be used.

Literature review

Survey of a sample size of at least 200 existing customers (list to be

provided by the company) and 100 prospective Al-Meezan customers( list
of such individuals may be available from the companys sales channel)

5 personal in-depth interviews from experts in this field.

2 Focus groups.

TIMELINE OF ACTIVITIES
October

Background research. We shall focus on understanding the industry dynamics by sifting through
the product literature from different companies, using MUFAP website, researching on foreign
jurisdictions and their behavioral pattern, studying regulatory framework (NBFC).

Project proposal/TOR to be given to the company.

TOR approval by the company.

TOR presentation the client, Mr. Asad Ilyas and Dr. Mohammad Nishat.

November

Literature review.

Focus group 1(Existing Investors)

Focus group 2 (Prospective investors)

Progress report to the company, project coordinator and project advisor.

December

Transcription and analysis of the focus groups.

Designing the personal interview questionnaire in consultation with the company.

Conducting 1 in-depth interview.

Transcription and analysis of the interview.

Progress report to the company, project coordinator and project advisor.

January

Conducting 4 in-depth interviews.

Transcription and analysis of the interviews.

Designing survey questionnaires in consultation with the company.

Administering 200 survey questionnaires to existing customers.

Progress report to the company, project coordinator and project advisor.

February

Administering 100 survey questionnaires to prospective customers.

Entry of data in SPSS.

Editing, coding and cleaning of data.

Progress report to the company and project advisor.

March

Data analysis.

Recommendations and conclusions.

Interim report submission.

April

Final report submission.(First half)

Final report presentation.(Second half)