Marketing of Mutual Funds in Pakistan:

Opportunities & Challenges

By
Sohail Yaqoob
 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

 Mutual Funds Industry in 2006

Total Industry Size - Rs. 171 billion

Open end Rs. 129.73 bn (US$ 2.83 billion)
Closed end Rs. 41.33 bn

Total number of Funds - 56

Open end 34
Closed end 22

Total number of AMC - 30

Public Sector 1
Private Sector 29
 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.

Asset Management Companies in Pakistan
Mutual Funds in Pakistan
Year-wise Growth of Mutual Funds Since
2001

8
Total Mutual Funds Industry as % of GDP
for the year 2005-2006

Source: State Bank of Pakistan 9

 Mutual Funds Industry to Bank Deposits
(September’ 2006)

Source: State Bank of Pakistan 10

 Worldwide Mutual Fund Industry

History and Inception of Mutual Funds

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
Worldwide Mutual Fund Industry
Asia/Pacific Mutual Fund Industry
 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.
Comparison of Islamic vs World Wide
Mutual Fund Industry
Comparison of Pakistan’s vs. World Wide
Islamic Mutual Funds
Total Mutual Fund Industry in Pakistan - Rs. 171.00 bn
Size of Islamic Mutual Funds in Pakistan-Rs. 9.12 bn
(5.33%)

17
Size of Islamic Mutual Fund in Pakistan - Rs. 9.114 bn
Market Share of Al Meezan Investments - Rs. 6.925 bn

18
Total Mutual Fund Industry in Pakistan - Rs. 171 bn
Market Share of Al Meezan Investments - Rs. 6.925 bn

as of September 30, 2006 19

Why Mutual Funds lagging in Pakistan?

Controlled by Public Sector, initially

Lack of awareness

Interest rates were too high

Education

Distribution

Low savings
 How many people know?

What is Mutual Fund?

What are different types of Mutual

Funds?

Why an individual invest in Mutual

Fund?

How can Mutual Funds be purchased?

What are the Advantages of investing
in Mutual Funds?

Experienced and Professional Fund Management

Diversified portfolio
Economies of Scale
Liquidity
Convenient processing
Affordability
Transparency
Stringent regulator
 What should be done to become a
significant contributor in the global
market?
(Opportunities)
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

Cont…
 What should be done to become a
significant contributor in the global
market?
(Opportunities)

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

Cont…
 What should be done to become a
significant contributor in the global
market?
(Opportunities)
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
 How can Mutual Funds be marketed?

Advertisement through Print Media

 Newspapers
 Magazines

Advertisement through Electronic Media

 Television
 Radio

Outdoor Advertising
 Hoardings
 Banners

Cont…
 How can Mutual Funds be marketed?

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?

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

 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
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…
 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
 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…
 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
 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
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.
Thank you