The Securities and Exchange Commission of Pakistan (SECP) has allowed Asset Management Companies (AMCs) to charge management fee up to one percent of average annual net assets of money market component invested in saving accounts and term deposits. This is subject to the condition that management fee up to one percent would be applicable in case of a Constant Proportion Portfolio Insurance (CPPI) based principal preservation fund/plan in a fund of funds category, the SECP added.
According to the SECP's circular number 3 of 2018 issued here on Wednesday, the Commission has issued categorization of open-end collective investment schemes. In continuation to circular No 7 of 2009, dated March 06, 2009, on "Categorization of Open-End Collective Investment Schemes," the SECP in exercise of the powers conferred under section 282B (3) of the Companies Ordinance, 1984 read with the Regulation 55(2) and 58(1)(n)&(p) of the Non-Banking Finance Companies and Notified Entities Regulations, 2008 (NBFC Regulations, 2008) hereby prescribes the amendments for the fund of funds schemes and allocation plans under them.
Firstly, a Constant Proportion Portfolio Insurance (CPPI) based principal preservation fund/plan in a fund of funds category may invest its money market component in saving accounts and term deposits with banks rated AA- and above. Secondly, an Asset Management Company (AMC) may charge management fee up to 1% of average annual net assets of money market component invested in saving accounts and term deposits in case of a CPPI-based principal preservation fund/plan in a fund of funds category.
Thirdly, the per party exposure limits given in Regulation 55(5) of the NBFC Regulations, 2008 shall not be applicable on money market component invested in saving accounts and term deposits in case of a CPPI-based principal preservation fund/plan in a fund of funds category.
Fourthly, an open-ended fund of funds scheme may invest the subscription money in a money market scheme managed by the same AMC during the pre-initial offering and initial offering period. All other conditions of abovementioned circular (circular No 7 of 2009 dated March 06, 2009) shall remain unchanged, the SECP added.
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