Mutual Funds:

- The Structure; and

- The Growth
Workshop by Abdul Qadir Lakhani, ACA, FCCA, Ex-PwC.
Sr. Assistant Director Finance, PCAA
LET’S CREATE AN INTENT TO BUY THE WATER
WELL

▪ WHAT IS A ONE SIMPLE PASSIVE INCOME WAY TO BECOME A

BILLIONAIRE!!!
▪ Did you know that simply by investing Rs. 15 thousand a month, you could
actually become CROREPATI.

Workshop by: Abdul Qadir Lakhani, ACA, FCCA, Ex-PwC 2

LET’S TRAVEL BY ROAD TO PESHAWAR

Workshop by: Abdul Qadir Lakhani, ACA, FCCA, Ex-PwC 3

FIRST LET’S KNOW THE EXPERTS TO BE
ASKED

▪ WARREN BUFFET
– Entrepreneur and investor,
– chairman and CEO of Berkshire Hathaway, an American multinational conglomerate holding company
headquartered in Omaha, Nebraska, United States.
– As per Forbes, Most successful investor of all times.
– A net worth of 106.6B dollars as of 31 dec 2022.
– An average annual earning of 20.1% over 57 years! i.e., If someone invested Rs. 100,000 , he would have 3.5
Arab by now!!!

▪ PETER LYNCH
– Manager of Magellan Fund.
– Retired at the age of 46 years after 13 years of managing the fund.
– 2700% gain over 13 years. 29% annual average growth rate ! i.e., If someone invested Rs. 100,000, he would
have 20 Arab by now!!!

▪ Check this out yourself: Use Future Value & SIP calculator
Workshop by: Abdul Qadir Lakhani, ACA, FCCA, Ex-PwC 4
ABDUL QADIR LAKHANI

▪ Chartered accountant from ICAP as well as fellow chartered certified

accountant from ACCA, UK;
▪ Worked at PwC network firm for more than 6 years;
▪ Currently working Senior Assistant Director Finance at Pakistan Civil Aviation
Authority;
▪ Keen interest in Personal Finance, particularly Value investing, passive income
and entrepreneurship!!!

Workshop by: Abdul Qadir Lakhani, ACA, FCCA, Ex-PwC 5

Areas to be covered
▪ MUTUAL FUNDS: FUNDAMENTALS!!!
– What are Mutual Funds?
– What is the structure of Mutual Funds?
– How are mutual Funds regulated?
– What are the different types of Mutual Funds?
– What are the different categories of Mutual Funds?
– How has the industry grown in Pakistan in recent times?

▪ MUTUAL FUNDS: APPLICATION OF THE FUNDAMENTALS!!!

– Understanding CAGR;
– Deciding on relevant Fund as per the objective;
– Evaluation of the Costs involved;
– Evaluating underlying assets;
– Value investing.

▪ TAX BENEFITS OF INVESTING IN MUTUAL FUNDS

▪ INVESTMENT AND DIVESTMENT METHODS
Workshop by: Abdul Qadir Lakhani, ACA, FCCA, Ex-PwC 6
▪ QUESTIONS & ANSWERS
MUTUAL FUNDS: FUNDAMENTALS
– What are Mutual Funds?
▪ A mutual fund is a collective investment scheme, which specializes in investing a pool of
money collected from investors for the purpose of investing in securities such as stocks, bonds,
money market instruments and similar assets.
– What is the structure of Mutual Funds? How are Mutual Funds regulated?
▪ Mutual Funds are operated by Asset Management Companies (AMCs) which exists in the form
of a public limited company registered under Companies Ordinance, 1984.
The AMC launches new funds through the establishment of a Trust Deed,
entered between the Asset Management Company and the Trustee,
with due approval from the SECP under the Non-Banking Finance
Companies (Establishment and Regulation) Rules, 2003 (the “Rules”).
The Trustee performs the functions of the custodian of the assets
of the Fund. The trustee ensures that the Fund Manager takes the
investment decisions within the defined investment policy of the
mutual fund. Under Pakistan law, banks and central depository
companies, approved by the SECP, can act as trustee.
Workshop by: Abdul Qadir Lakhani, ACA, FCCA, Ex-PwC 7
TYPES OF MUTUAL FUNDS
– Open Ended Funds:
▪ Create and issue new funds on demand!!!
▪ Also called Unit trusts!
▪ Continuous buying and selling on Net Asset Value (NAV)!

– Closed Ended Funds:

▪ Have fixed number of units!
▪ Issued through IPO!
▪ Once issued, these could be bought and sold through Stock Exchange!

Workshop by: Abdul Qadir Lakhani, ACA, FCCA, Ex-PwC 8

CATEGORIES OF MUTUAL FUNDS
– Equity Funds
▪ Investment in equity: Higher returns but High risks
– Balanced Funds
▪ Equity plus fixed income securities: Reasonable return with reasonable risks
– Index Tracker Funds
▪ Mirrors the risks and returns of a particular Index
– Income Funds
▪ Investment in debt instruments for regular income with minimal risk
– Money Market Funds
▪ Investment in safer debt instrument but regular income
– Asset allocation Funds
▪ Switch between Equity and Debt as per the situations
– Capital Protected Funds
▪ Capital protection with the benefit of investment in equity
– Voluntary Pension Fund
▪ Regular income on retirement with different risk level options
– Exchange Traded Funds
▪ Least cost with index tracking
– Fund of Funds
– Commodity Funds
Workshop by: Abdul Qadir Lakhani, ACA, FCCA, Ex-PwC 9
MUTUAL FUND INDUSTRY GROWTH IN PAKISTAN

Workshop by: Abdul Qadir Lakhani, ACA, FCCA, Ex-PwC 10

MUTUAL FUNDS : APPLICATION

▪ Determining Factors:
– What is CAGR?
▪ Compound Annual Growth Rate
– What is inflation?
▪ Reduction in value of money
– The front end load, the back end load and management fees involved
– Objective of investment?
▪ Growth, income or both?
– Risk appetite?
▪ High, Medium or Low?
– What are the underlying assets?
▪ Is it equity (which type of equity) or debt?
– What is Value investing?
▪ Investing in to a business as partnership for growth
Workshop by: Abdul Qadir Lakhani, ACA, FCCA, Ex-PwC 11
TAX BENEFITS OF INVESTMENTS IN MUTUAL
FUNDS & INVESTMENT and DIVESTMENT

▪ Up to 20% of taxable income as tax credit on investing in Voluntary Pension

Fund Schemes;
▪ Investment and divestment could be made through the App of the asset
management company that normally takes two to three days to process.

Workshop by: Abdul Qadir Lakhani, ACA, FCCA, Ex-PwC 12

INVESTMENT and DIVESTMENT: APP Screens

Workshop by: Abdul Qadir Lakhani, ACA, FCCA, Ex-PwC 13

THANK YOU!!!

▪ Any Further Questions, Please ???

Workshop by: Abdul Qadir Lakhani, ACA, FCCA, Ex-PwC 14