Mutual Funds

1. Marketing of Mutual Funds in Pakistan:
Opportunities & Challenges
By
Sohail Yaqoob

3. History of Mutual Funds in Pakistan
1962 - Government of Pakistan established NITL which launched
first Open End Equity Fund in Pakistan – NIT
1966 - Government of Pakistan established ICP which launched
series of Closed End Funds (25).
Only in the Mid 90s, the sprouts of mutual funds is witnessed
1994-95 - More funds launched in private sector
2006 - Total number of AMCs are 30 managing 56 mutual funds

4. Total Industry Size - Rs. 171 billion
(US$ 2.83 billion)
Total number of Funds - 56
Total number of AMC - 30
Open end Rs. 129.73 bn
Closed end Rs. 41.33 bn
Open end 34
Closed end 22
Public Sector 1
Private Sector 29
Mutual Funds Industry in 2006

5. Major Market Players
National Investment Trust Ltd.
JS ABAMCO Ltd.
Arif Habib Investment Management Ltd.
Al Meezan Investment management Ltd.
Atlas Asset Management Ltd.
UBL Fund Managers Ltd.

6. Asset Management Companies in Pakistan

7. Mutual Funds in Pakistan

8. 8
Year-wise Growth of Mutual Funds Since 2001

9. 9
Total Mutual Funds Industry as % of GDP
for the year 2005-2006
Source: State Bank of Pakistan

10. 10
Mutual Funds Industry to Bank Deposits
(September’ 2006)
Source: State Bank of Pakistan

11. First modern day mutual fund was opened in North America in
1924
The GREAT DEPRESSION of 1930s in USA has stalled the
growth of mutual funds sector, like many other economic
activities
Yet it was, 1990s that mutual funds became mainstream
investments in the USA and around the globe
At the end of June 2006, total mutual fund assets all over the
world were $ 19.413 trillion
History and Inception of Mutual Funds
Worldwide Mutual Fund Industry

12. Worldwide Mutual Fund Industry

13. Asia/Pacific Mutual Fund Industry

14. Islamic Mutual Fund Industry
One of the fastest growing sectors BUT
As compare to over all mutual fund industry, it is at infancy
stage of growth and development
The wider acceptance of equity funds by Shariah Scholars in
early 1990s paved the way to launch Islamic mutual funds.
Currently, approximately 250 Islamic Institutions in some 75
countries, managing funds worth over USD $200 billion.

15. Comparison of Islamic vs World Wide
Mutual Fund Industry

16. Comparison of Pakistan’s vs. World Wide
Islamic Mutual Funds

17. 17
Total Mutual Fund Industry in Pakistan - Rs. 171.00 bn
Size of Islamic Mutual Funds in Pakistan-Rs. 9.12 bn
(5.33%)

18. 18
Size of Islamic Mutual Fund in Pakistan - Rs. 9.114 bn
Market Share of Al Meezan Investments - Rs. 6.925 bn

19. 19
Total Mutual Fund Industry in Pakistan - Rs. 171 bn
Market Share of Al Meezan Investments - Rs. 6.925 bn
as of September 30, 2006

20. Controlled by Public Sector, initially
Lack of awareness
Interest rates were too high
Education
Distribution
Low savings
Why Mutual Funds lagging in Pakistan?

21. What is Mutual Fund?
What are different types of Mutual
Funds?
Why an individual invest in Mutual Fund?
How can Mutual Funds be purchased?
How many people know?

22. Experienced and Professional Fund Management
Diversified portfolio
Economies of Scale
Liquidity
Convenient processing
Affordability
Transparency
Stringent regulator
What are the Advantages of investing
in Mutual Funds?

23. Cont…
What should be done to become a
significant contributor in the global market?
Putting collective efforts at industry level
Comprehensive analysis of investors’ needs
and preferences
Education of People about mutual funds at mass level
Product innovations by launching specialized
products.
Widening, broadening and deepening the markets
Tapping overseas investor base
(Opportunities)

24. Cont…
What should be done to become a
significant contributor in the global market?
Marketing in semi-urban and rural areas
Improving quality of service
Quick dissemination of information
Banking and other related industries to utilize their
network for mutual fund distribution
Expanding distribution network by discovering non-
non-traditional channel of distribution
(Opportunities)

25. Understanding the importance of retail market
Separate funds for various investors’ segments.
Promoting standardize performance measurement
procedures at industry level
Creating positive image about the fund and changing
the nature of the market
Better technology aiming at providing quality service
What should be done to become a
significant contributor in the global market?
(Opportunities)

26. Advertisement through Print Media
 Newspapers
 Magazines
Advertisement through Electronic Media
 Television
 Radio
Outdoor Advertising
 Hoardings
 Banners
Cont…
How can Mutual Funds be marketed?

27. Direct Marketing
 Personal Selling
 Telemarketing
 Direct Mail to existing as well as potential investors
Below the line activities (BTL)
 Participation in exhibition
 Information desk as public places
 Arranging seminars - Corporate as well as Educational
Selling through Intermediaries/Distributors
Cont…
How can Mutual Funds be marketed?

28. Comprehensive website and link with other popular
websites
Providing quick response to the Customers through
 Distribution Centers
 Call Centers
 Emails
Providing up to the mark value addition services
How can Mutual Funds be marketed?

29. What about the target market?
Individuals
Institution
 Government Institutions
 Private Organizations
 Provident / Pension Funds
Trusts / Funds / Welfare Organizations
Educational Institutions
Overseas investors
Semi-urban and rural Segment

30. What would be the appropriate marketing
strategy for each segment?
Individuals
Indirect selling through distributor network and regular
campaigns through print and electronic media, exhibition
Institutions
Personalized and direct marketing
Trusts / Funds / Welfare Organizations
Direct selling as well as indirect selling through distributor
network and creating awareness through appropriate media
Cont…

31. What would be the appropriate marketing
strategy for each segment?
Overseas investors
Personalized and direct marketing, prompt and timely service,
website links, advertisement in foreign print media, seminars /
conferences, road shows
Educational Institutes
Personalized and direct marketing
Semi-urban and rural Segment
Electronic media, simplified literature in rural languages,
visits
by mobile vans with audio-visual aids, hoardings, wall
paintings and educational films

32. Challenges for Mutual Fund
Industry
Lack of diversified products range
Understanding of investors’ need
Public awareness at mass level
Un-stability of Stock Market
Dearth of liquid debt instruments
Protecting and maintaining the integrity and quality
Ensuring performance
Maintaining momentum to ensure viability
Providing competitive returns
Cont…

33. Challenges for Mutual Fund
Industry
Mitigating the Risk involved
Inadequate Intellectual Capital
Comforting & convincing with bad past investment
experiences
Budgetary constraints for Marketing activities.
Low saving and Investment oriented society
Information disclosure and transparency
Choosing appropriate distribution network
Right timing to launch funds
In time after sale activities
Strict monitoring of regulators

34. Recommendations
Team work for the growth of mutual fund industry
Mass awareness and education about mutual funds
Strengthening distribution network
Understanding the fact that related financial industries are
not a threat
Promoting healthy business practices and ethical code of
conduct
Disseminating timely information
Establishing affiliations with mutual funds associations in
other countries and promote one-to-one contacts
Media should play a more supportive and constructive role
for awareness and disseminating information

35. The winning formula is the troika of
performance, service and trust for
meeting long-term goals and
becoming a true success story in the
world’s financial markets.

36. Thank you