a _59_ by shimeiyan1


									Marketing of Mutual Funds in Pakistan:
     Opportunities & Challenges

            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.


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

    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
      Worldwide Mutual Fund Industry

History and Inception of Mutual Funds

First modern day mutual fund was opened in North America in
The GREAT DEPRESSION of 1930s in USA has stalled the
growth of mutual funds sector, like many other economic
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

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

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



   Low savings
   How many people know?

 What is Mutual Fund?

  What are different types of     Mutual

 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
 Convenient processing
 Stringent regulator
     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
    Widening, broadening and deepening the markets
    Tapping overseas investor base

     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

     What should be done to become a
significant contributor in the global market?
  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

     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

     How can Mutual Funds be marketed?

Comprehensive website and link with other popular
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?

 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?

Indirect selling through distributor network and regular
campaigns through print and electronic media, exhibition
Personalized and direct marketing
Trusts / Funds / Welfare Organizations
Direct selling as well as indirect selling through distributor
network and creating awareness through appropriate media

   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,
   by mobile vans with audio-visual aids, hoardings, wall
   paintings and educational films
 Challenges for Mutual Fund
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

  Challenges for Mutual Fund
Mitigating the Risk involved
Inadequate Intellectual Capital
Comforting & convincing with bad past investment
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
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
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

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