Abamco is expected to start selling units in its open ended mutual fund where investment would be pegged at Abamco 30 index constituted on the basis of free float. The company has raised the seed capital, while it is expected to start initial public offering in two weeks' period.
According to an information available here, the latest in Index Funds in Pakistan is the UTP A30+ Fund. This fund tracks the Abamco 30 ('A30') Index, which is a superior Index constituted by Abamco on the basis of free float, market capitalisation and daily market value traded. With its efficient methodology, professional management, and transparent and objective criteria of stock selection, 'A30' Index covers the majority of the investable market in Pakistan. The stock selection process of A30 Index is designed to bring up those stocks which lead the broad market direction, yielding a comprehensive measure for following the overall market.
UTP - A30+ Fund will be first open-end index fund in Pakistan's mutual fund industry. The only other index fund in Pakistan is the AKD Index Tracker Fund, which is a closed-end scheme. AKD Index Tracker Fund tracks the KSE 100 Index. This will be the first fund of its kind that will not only track an index but will also offer its investors liquidity due to an open end structure. The fund will offer a new window of opportunity to investors by allowing them to directly take advantage of capital market movements, without any funds manager bias or incorrect decisions.
The UTP - A30+ Fund will insure that the fund's portfolio is fundamentally invested in the most sound and liquid scrips of financially strong companies by following the A30 Index. With its methodology of stock selection, A30 Index represents the most liquid stocks on the Karachi Stock Exchange.
Index Funds are a portfolio of investments that are invested with the same weightings as a stock exchange index in order to mirror its performance.
'Index Fund' describes a type of mutual fund whose investment objective typically is to achieve the same returns as a particular market index. An index fund will attempt to achieve its investment objectives by investing in the securities (bonds or stocks) of companies that are included in a selected index. Some index funds invest in all of the companies included in an index; other index funds invest in a representative sample of the companies included in the index.
The management of index funds is more 'passive' than the management of non-index funds, because an index fund manager only needs to track a relatively fixed index of securities.