Message from Chairman SECP

On their fiftieth anniversary, I would like to congratulate the management of the National Investment Trust Limited (NIT) for having played a pioneering and critical role in defining where the mutual funds industry stands today in Pakistan.
Since 1962, when NIT was established by the Government, it has been serving our capital market - NIT managed the first open ended mutual fund in the country - thus greatly contributing to creating awareness about savings and investment among the general public.
While our mutual funds industry has come a long way since those early days, we still need to go quite far just to catch up with the rest of the world. During the year ended June 30, 2012, the mutual funds industry has shown good progress in spite of tough economic conditions prevailing in our markets - showing an increase of 41% over the preceding year. However, our mutual funds industry represents less than 4% of the overall financial assets and it is, therefore, very important to attract retail class investors to participate for long term development.
Looking towards the future, we need to ensure that our mutual funds industry is able to transition into a sustainable and profitable area of investment. To this end, the SECP had constituted a non-bank financial (NBF) sector reform committee, comprising leading market professionals and officials from the SECP, to recommend reforms for the development of the NBF sector in Pakistan. The committee's report will shortly be made public for stakeholder consultation.
For the mutual funds industry, the committee has proposed incentives to AMCs for targeting retail investors, such as charging distribution expenses to fund as a percentage of net assets and making it mandatory for AMCs to establish their own distribution network. Other proposed reforms include reduction in the annual regulatory fee provided more than 50% of funds' net assets are held by retail clients; introduction of concept of expense ratio; introduction of multiple classes of units based on the investment amount; improving the skill set of key personnel such as fund managers by specifying the minimum criteria, etc. We hope that these steps will bear fruit and make our mutual funds industry competitive, better governed and transparent.
Although NIT has the expertise, gained from five decades of operating as a market leader, which has paid rich dividends in terms of development of sound operational systems and regulatory framework, however, times have changed and NIT is no longer the only participant. So, NIT will have to work very hard in future to stay competitive. In a globally integrated world, in order to stay competitive we cannot afford to rest on past glory and must constantly stretch to grow and improve.
I expect that NIT will continue working diligently to play the important role it has been assigned and that it will further enhance its expertise so that it becomes a role model and benchmark for excellence for the rest of the mutual funds industry.