Islamic investment funds in Pakistan yet to take-off?
The Islamic funds represent about 12% of the overall fund management industry in Pakistan. Introduction of Islamic funds has widened the industry's clientele by bringing a number of individuals in the investment bracket who were previously resistant to invest because of religious concerns. The first conventional investment fund was launched in Pakistan in 1962 while the first Islamic fund appeared 40 years later in 2002. Today the total assets under management of Islamic mutual funds in Pakistan are over Rs. 58 Billion. In Pakistan, all types of funds that are available in the conventional funds industry are also available on the Islamic side e.g. equity, money market, sovereign, corporate fixed income, index tracker, capital protected etc.The KMI-30, the only Islamic index available in Pakistan which was launched in 2008, measures the performance of Sharjah compliant equity investments. The leading conventional index is KSE 100 Index. It is interesting to note that since its launch KMI-30 has consistently outperformed KSE 100.
The Dow Jones Islamic Market Pakistan Index (reviewed quarterly) measures the stock performance of companies traded in Pakistan that pass screens for compliance with Islamic principles. Calculation of the Dow Jones Islamic Market Pakistan Index began on October 27, 2006. The index is weighted by float-adjusted market capitalization which stood at PKR 330.3 Billion as of end of May, 2013.
According to official sources, the index had a price return of 44.69% during 2012.
According to news sources (May 2013), the Securities and Exchange Commission of Pakistan (SECP) has recently decided to establish a Shariah advisory board to guide Islamic Financial Institutions (IFIs) and Islamic Capital Markets in their transactions. The board would also be responsible for undertaking educational activities for understanding Shariah principles and introduction and implementation of new models and products based on international research. The nine members of board of the SECP will include prominent Ulema, a jurist, an accountant and representatives of the commission.
The Islamic funds industry is still going through its nascent stage. Awareness about Islamic investment funds will help in capital mobilization, considering the industry's huge growth potential. Information dissemination about the transparence of selection criteria can be an important step forward. Islamic funds industry is still evolving, developing and growing with new players entering the market.
In Pakistan, where Islamic Funds represent only 12% of the Funds Management Industry, there is still a long way for Islamic Industry to go.
New Entrant in the Market ABL AMC launches Islamic Stock Fund
ABL Islamic Stock Fund (ABL-ISF) is the newest addition to ABL Asset Management's product portfolio. ABL-ISF is the second Islamic mutual fund being launched from ABL's platform, after ABL Islamic Income Fund in 2010. The fund will be available through all branches of Allied Bank and ABL Asset Management from the second week of June.
The objective of ABL-ISF is to provide higher risk adjusted returns through capital gains and dividends by investing in a diversified portfolio of equity instruments, permissible under the Shariah principles. This fund will be benchmarked against the KMI-30 index, which has outperformed its peers by a very wide margin ever since this index was launched in 2008.
This fund is targeted to investors with a medium to long term horizon such as retirement funds, insurance companies, high-net worth individuals etc. who would like to diversify their investments and enhance portfolio returns in a Shariah compliant manner with the flexibility to redeem at any time.
Eminent religious scholar Mufti Irshad Ahmed Aijaz, who is the Shariah Advisor of Fortune Islamic Services and resident Shariah Advisor of Bank Islami Limited, is the Shariah Advsior of ABL-ISF.
Islamic Investment Fund in Pakistan Assets under Management in April 2013 (PKR mn) Islamic Aggressive Fixed Income United Islamic Income Fund 490 NAFA Islamic Aggressive Income Fund 163 KASB Islamic Income Opportunity Fund 507 Islamic Money Marked Meezan Cash Fund 6,505 HBL Islamic Money Market Fund 428 HBL Islamic dish Fund 165 Islamic Income UBL Islamic Sovereign Fund 4,155 MCB Islamic Income Fund 3,167 Atlas Islamic Income Fund 639 Askari Islamic Income Fund 711 NAFA Riba Free Savings Fund 1,430 Meezan Islamic Income Fund 2,164 Meezan Sovereign Fund 20,053 Favsal Islamic Savings Growth Fund 784 Ktl Islamic Income Fund 148 Pak Oman Advantage Islamic Income 286 ABL Islamic Income Fund 1,171 Islamic Balanced Fund NAFA Islamic Multi Asset Fund 385 First Habib Islamic Balanced Fund 300 Islamic Capital Protected Fund Meezan Capital Protected Fund-II 489 Islamic Equity JS Islamic Fund 327 Atlas Islamic Stock Fund 845 Meezan Islamic Fund 7,687 HBL Islamic Stock Fund 404 Al-Meezan Mutual Fund 2,021 UBL Shariah Stock Fund 1,336 Islamic Index Tracker K5E Meezan Index Fund 618 Islamic Asset Allocation Pak Int. Element Islamic Fund 177 Askari Islamic Asset Allocation Fund 161 Alfalah GHP Islamic Fund 354 Dawood Islamic Fund -- Pak Oman Advantage Islamic Fund 128 Total Assets under Management 58,197 Source: ABL AMC KMI-30 Performance 2009 105% 2010 39% 2011 6% 2012 45% Source: Karachi Stock Exchange Note: Table made from bar graph. Returns Comparison since KM1-30 Inception KSE-30 58.8% KSE-100 125.3% KMI-30 218.1% Source: Karachi Stock Exchange Note: Table made from bar graph. Sector Allocation Consumer Goods 33.62% Oil & Gas 31.33% Industrials 19.75% Basic Materials 10.95% Health Care 3.26% Financials 1.09% Fact Sheet, Dow Jones Islamic Market[TM] Pakistan Index May, 2013
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| Title Annotation: | ISLAMIC INVESTMENT / FUND MANAGEMENT |
|---|---|
| Comment: | Islamic investment funds in Pakistan yet to take-off?(ISLAMIC INVESTMENT / FUND MANAGEMENT) |
| Publication: | Economic Review |
| Article Type: | Statistical data |
| Geographic Code: | 9PAKI |
| Date: | Jun 1, 2013 |
| Words: | 901 |
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