Mutual fund - Burhan Khan.ppt

7/27/2019 Mutual fund - Burhan Khan.ppt

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Mutual Funds


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WHAT IS MUTUAL FUNDS?

A mutual fund is just the connecting bridge or afinancial intermediary that allows a group of

investors to pool their money together with a

predetermined investment objective.Three benefits of investors

Small investors

Diversification

Professional management


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Types of Mutual Funds

Open Ended

Closed Ended

Open-end Mutual Fund

Open ended fund is a fund which issues or

redeems its units at net asset value (NAV).

It dose not have a fixed fund size.

Investors can get back their investment at any

time by selling the units back to the fund.

These are no fixed number of units.


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Close-end Mutual Fund

Close end fund is a fund whose certificates aretraded at market prices other than the NAV.

Compulsory listed .

Investors can sell their certificates to any buyerthrough an exchange where the certificate is

listed other then the issuing company.

These are fixed number of certificates.


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BACKGROUND OF MUTUAL FUND The first mutual funds were established in Europe.

One researcher credits a Dutch merchant with

creating the first mutual fund in 1774.

Mutual funds were introduced into the United

States in the 1890s.

The first open-end mutual fund with redeemableshares was established on March 21, 1924.

Fund industry growth continued into the 1980s

and 1990s.

At the end of 2010, there were 7,581 mutual funds

in the United States with combined assets of $11.8

trillion.


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Back Ground of Mutual Fund

Industry in Pakistan

Realizing the importance of mutual fundindustry, the Government of Pakistan (G0P)

set up National Investment Trust Limited

(NITL) in 1962 to manage an open-end

mutual fund.

In 1966, G0P set up another institution -

Investment Corporation of Pakistan (ICP) .

In 1971, G0P allowed private sector closed-

end funds to enter the industry.


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the period 1991 onwards that the private sector

closed end funds were launched.

Golden Arrow was the first closed end fund to beestablished in the private sector in 1983.

Asset Management Companies Rules, 1995 to

provide the necessary legal framework for

launching and managing open-end funds by the

private sector.

1994-95 - More funds launched in private sector .


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incentive to setup open-end mutual funds and a

record 15 new listings came out in 2002.

2006 - Total number of AMCs are 30 managing 56

mutual funds .

2011- Total number of AMCs are 22 managing

managing 128 open end funds and 14 close endfunds.(source MUFAP).


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S.no Manager Assets under management

1 National Investment Trust 41,554,31616.82

2 Al Meezan Investment Management 30,065,88912.17

3 MCB Fund Managers 28,997,33611.73

4 UBL Fund Managers 28,762,31011.64

5 ABL Fund Managers 19,052,040 7.71

6 NBP Fullerton Asset Management 16,414,9166.64

7 JS management 11,965,0324.84

8 HBL Fund Managers 9,647,6653.9

9 Askari Asset Management 8,358,8983.38

10 Faysal Asset Management 6,383,7532.58

174,142,854 70.5

Top ten open-end fund Asset Management Companies, September 2011


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PRODUCTS AND PORTFOLIOS OF Mutual Funds

Stock Fund / Equity Fund / Capital Market Fund

80% in equity.

20% bank deposit.

Fixed Income Fund / Money Market Fund

Above 60% in bonds

25% T.bills

15% banks deposit not more than this.


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Islamic Fund

80 % on Government of Pakistan sukkuk.

20% bank deposit in islamic banks.

Hedge Funds(not present in pakistan)

Hybrid Funds

Its a balance fund invest in capital market and

money markets and remaining in bank deposit.


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SECP


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AMC

Manage mutual funds

Discretionary portfolio. Wealth management.

Investors/unit holders

Make investment They invest after reviewing Offering documents.

Trustee Payment & Receipt under observation of trustee.

Registrar Official keeper of record.

Units sale ,redemption , unit holder , dividend distributor.


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Custodian / Depository

to hold in safekeeping assets (CDC)

Other Key words Net Asset Value

Sale

Sale price Redemption

Redemption price

Management Fee

Sale load/Front End Load

Back end load

Front end load


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THANK YOU


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Questions/AnswerSession

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Mutual fund - Burhan Khan.ppt