Mutual Funds Association of Pakistan (MUFAP) conducted a workshop on "Compliance & Ethics" on July 30 2005 here, chaired by MUFAP's Chairman, Zaigham Mahmood Rizvi and attended by large number of participants from the mutual fund industry.
MUFAP at present poised with membership extended to 20 investment advisors/asset management companies managing 33 funds, 19 in closed-end sector and 14 in the open-end sector with total net assets under management at Rs 40,854 million and Rs 88,768 million respectively totalling Rs 129,622 million as on March 31, 2005.
Mutual funds industry in Pakistan these days is going through a phenomenal growth due mainly to advent of private sector, improved and disciplined behaviour of the industry, governmental support and development of specialised and innovative products. MUFAP encourages its members to introduce diversified products to satisfy various levels of investors' risk and return profile.
The purpose of the workshop was two folds: 1) To promote healthy business practices, ethical code of conduct, standard principles and practices among the members of the association and others engaged in the activities of mutual funds, investment advisors and asset management companies. 2) To summarise recommendations of the workshop for onward submission to International Investment Fund Association (IIFA) for their usage at its next annual conference.
Zaigham gave a brief account of mutual fund industry in Pakistan since its inception when first open-end fund, NIT was launched in public sector. He indicated that progress in mutual funds industry though remained very slow and dismal over the years in Pakistan in comparison with global mutual funds industry in terms of size, market penetration, product innovation, however, now the industry was making a good headway and progress in all areas. He enumerated the various main challenges like small industry size, lack of diversified products, lack of distribution network etc at present confronting the industry and said that implementation of compliance and ethics is one such major challenge which the industry is required to address on an urgent basis. He highlighted the importance of the subject stating that compliance of multiple rules and regulations & good corporate and business ethics are the essential elements of good corporate governance and help the management and board of directors to develop disciplined people, disciplined thoughts and disciplined actions and thus create positive, friendly and enabling environment in the company to meet its ultimate goal of achieving wealth and sustained growth, increasing shareholders' returns and remaining a viable entity for the long term.
The speakers who spoke on the occasion included, Ramiz Allawala, Founder - Gulf Stone Training, Muhammad Shoaib, CEO Al-Meezan Investment Management, Mir Muhammad Ali, CEO United Asset Management Co Ltd, Mudassar M. Malik, CEO BMA Asset Management Co Ltd and Nasim Beg, CEO Arif Habib Investment Management Ltd.
Ramiz Allawala said that unfortunately people in general did not take the subject of compliance and ethics seriously in their day to day dealings and took it just for granted. He emphasised that serious and sincere attention now be given to the subject for the benefit of country including mutual fund sector. Muhammad Shoaib spoke on the mechanism for self-regulation. He made a detailed presentation on code of ethics and the responsibilities of fund managers while dealing with clients, undertaking trading, managing portfolio and pooled funds, providing information to clients regarding themselves, their personnel, investments or investment process etc.
Mir Muhammad Ali said that corporate governance had been a buzzword during the last decade and helped build the relationship among the board, management and shareholders and fixed their respective responsibilities to ensure transparency in major corporate decisions. He said that key driver of corporate performance was investor activism. He stressed the need for developing a corporate governance policy for fund management companies. He also proposed to offer incentives for companies following corporate governance standards.
Mudassar M. Malik indicated that trust and integrity were the foremost issues facing the industry and these could be achieved only through implementation of code of ethics in letter and spirit. He emphasised that this was quite essential for the growth and development of the mutual fund sector.
Nasim Beg spoke about the issues confronting the industry indicating that resolution of these issues was a key to improve investor confidence and trust in mutual funds industry. He suggested to resolve these issues through the participation of all concerned on priority basis in the larger interest of the industry.
In the end, Tariq Iqbal Khan, MD & Chairman, NIT and Vice Chairman, MUFAP in his concluding remarks supported the views of the speakers on the subject. He said that all stakeholders should respect and protect the rights of each other in order to gain investor confidence and attract more investment in the industry. He said that the subject was very important and wide but would be beneficial only if practised and implemented with sincerity and in right earnest.-PR
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