Pakistan Industrial Credit & Investment Corporation Ltd (Picic) will float two new closed-end mutual funds worth Rs one billion each. The two products include an Energy Fund, which is a dedicated fund for power & energy, and the other is a Hedge Fund.
Both products aim to cater to the needs of all types of investors including pensioners /widows/senior citizens who desire regular income taking moderate risk and have been badly hit by low interest environment.
Besides acquiring a licence for establishing a general insurance company in Pakistan, Picic is also contemplating to launch a life insurance company for which planning is underway. On the other hand, Picic has also been short-listed by Privatisation Commission to participate in the bidding for National Investment Trust Limited (NIT).
This was stated by Picic Managing Director Muhammad Ali Khoja, while unfolding the corporation's future plans at the Annual CFA Charter Award Ceremony, 2004, organised by Pakistan Society of Investment Professionals (PSIP) on Friday.
Making an appraisal of the investment and saving environment in the country he said that local savings were primarily used to be placed in banking sector deposits and national saving schemes. Today approximately $ 32 billion is in the form of banking/DFI deposits and $ 15 billion is invested in National Saving Schemes managed by government, he said. He observed that in the past, the high rate of return offered by the government schemes restricted the growth of investment management sector in the country.
Comparing the local mutual fund industry with India, he said that total mutual fund industry of Pakistan stood at only 4 percent of total banking/DFI sector deposits, whereas the same in India was approximately 20 percent. He said that as far as debt market was concerned its size was only Rs 18 billion, offering an average return of about 8 percent. Equity market stood at Rs 1.44 trillion (27 percent of GDP), with free float of only 35 percent.
He said that investment management sector was constituted by 17 investment advisers/asset managers with 11 open-end and 19 closed-end funds, depicting a total assets size of approximately Rs 94 billion, while the cumulative experience of investment management industry in the private sector was not more than 10 years.
However, he said he believed that financial/capital markets in Pakistan were heading towards their true potential wherein various investment products for different types of investors would be offered. He also proposed participation of common investors in real estate through Real Estate Investment Trust, but said that its development was subject to computerisation of land record which was expected to be completed in next couple of years by CBR.
Of the development of mutual fund industry, he said that it was dependent on deregulation of national saving schemes which meant converting them into broad based mutual funds. For the development of hedge funds he suggested the deepening of futures market, introduction & strengthening of options market along with maturity of fixed income and development of fixed income derivatives market. In this perspective, he opined that SBP and SECP both were taking positive steps in the right direction to achieve the target.
Others who spoke were PSIP President Mohammad Shoaib, CFA and Professor Dr Assem Safieddine, CFA.
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