Pakistan mutual fund assets rise to Rs3.9 trillion in six years

Pakistan’s mutual fund sector has witnessed remarkable growth, expanding nearly seven times within the past six years. Total assets under management (AUMs) surged from Rs578 billion in 2019 to Rs3.93 trillion by June 2025, according to the latest figures released by the Securities and Exchange Commission of Pakistan (SECP).

This expansion has been fuelled by impressive gains in both conventional and Shariah-compliant funds, highlighting investors’ growing interest in diversified and regulated financial products.

Conventional vs. Shariah-Compliant Growth

During this period, conventional funds grew by 5.2 times, reaching Rs2.206 trillion. In contrast, Shariah-compliant funds showed even stronger momentum, rising 6.7 times to Rs1.726 trillion. As a result, Islamic funds now account for 44% of the industry compared to 39% in 2019, reflecting the increasing demand for ethical and faith-based investment opportunities among both retail and institutional clients.

Temporary High Followed by Adjustment

Industry AUMs had peaked at Rs4.43 trillion in December 2024 but dropped to Rs3.93 trillion by June 2025 — a decline of more than half a trillion rupees.

A senior SECP official explained that this correction was largely linked to the government’s imposition of up to 16% tax on banks with an Advance-to-Deposit Ratio (ADR) below 50% at the end of 2024. To meet compliance, banks encouraged major clients to shift deposits into mutual funds temporarily. Once requirements were met, much of this money returned to the banking system.

Even with this adjustment, the sector maintained strong year-on-year growth, underlining its rising importance within Pakistan’s financial landscape.

SECP’s Next Phase of Reforms

To ensure sustainable progress, the SECP is working with market stakeholders on reforms aimed at:

• Digitalizing mutual fund platforms for easier access.
• Introducing Exchange Traded Funds (ETFs).
• Launching infrastructure and ESG-focused funds for sustainable investments.
• Expanding retail outreach through Systematic Investment Plans (SIPs).
• Increasing women’s participation in financial markets.
• Strengthening transparency, governance, and investor protection standards.

These initiatives are expected to deepen Pakistan’s capital markets, channel savings into productive sectors, and broaden the investor base.

Rising Role of Retail Investors

Data shows that retail investors’ share in AUMs increased to 39.2% in 2025, up from 38% in 2019. Meanwhile, corporate investors’ share slightly dropped from 62% to 61%.

Currently, there are 768,769 individual investors and 6,361 institutional investors participating in the market — a clear indication of retail investors’ growing footprint in Pakistan’s financial ecosystem.

Analysts’ Perspective

Experts attribute the sector’s rapid growth to:

• Low returns offered by bank deposits.
• Rising awareness and financial literacy.
• Proactive regulatory backing from the SECP.

However, they also caution that long-term growth will require continuous innovation, stronger oversight, and easier accessibility for the masses. With mutual fund penetration still limited compared to neighboring markets, analysts believe Pakistan has vast room for expansion.

If the SECP’s reform agenda is effectively implemented, mutual funds could become a vital pillar of Pakistan’s economic development by mobilizing domestic savings into long-term, growth-oriented investments and strengthening overall capital markets.