ARIF HABIB INVESTMENTS MUTUAL FUNDS
Arif Habib Investments is one of the fastest growing asset management companies in Pakistan
Mar 01 - 07, 2004
Arif Habib Investments mutual funds have provided an attractive alternative investment avenue for Pakistani investors. By definition, mutual funds are pools of peoples' money. Individuals and institutions buy shares/units of mutual funds, and the funds invest the money in certain specific types of assets, (for example, common stocks, bonds). The units issued to investors entitle them to a pro rata portion of the income generated by these assets. Investment in mutual funds is a norm throughout the developed world; where the size of funds being managed by mutual funds far exceed that of deposits with banks. Following the government decision to rationalize the rate of return on national saving schemes in the wake of overall fall in interest rates in the economy, mutual funds provided the best alternative for investors looking for safety as well as return. In the case of later, safety does not stem from any guarantee. In fact, protection for the investors has been enshrined through the adoption of a comprehensive system of regulations and monitoring of asset management companies and their mutual funds by the SECP.
Arif Habib Investments is one of the fastest growing asset management companies in Pakistan. Currently they offer investors three types of open-end funds, which cover three broad investment avenues in Pakistan, stock market; short term fixed income market; and long term fixed income market. In addition, they have devised a number of investment plans (including, hybrids of their existing open-end funds, offering various levels of equity and debt combinations) by keeping in view risk and reward preferences of different classes of investors. The returns generated by their mutual funds and related investment plans have exceeded market averages during the past.
Arif Habib Investments started its business in March 2002, with the launch of two open-end mutual funds namely Pakistan Stock Market Fund (PSM) and Pakistan Income Fund (PIF), having a core capital of Rs 250 million each. A third open-end fund was added in November 2002, when the company formed a strategic alliance with Metropolitan Bank to launch the MetroBank — Pakistan Sovereign Fund (MSF), with a core capital of Rs 250 million. After the successful launch of three open-end funds, Arif Habib Investments moved to closed-end funds side, by acquiring the management rights for the closed-end KASB Premier Fund, now called Pakistan Premier Fund (PPF), in December 2002. The year 2003 proved to be a phenomenal growth year for the funds under their management, with record performance in terms of asset growth and yields. Arif Habib Investments started the year 2004 with the launch of a new closed end fund, Pakistan Capital Market Fund (PCM) worth Rs 1,500 million. Overall, the company is presently managing in excess of Rs 7.5 billion in three open-end and two closed end mutual funds.
Arif Habib Securities Limited is the main sponsor of the company. It is a public limited company and one of the leading stock brokerage houses of Pakistan with capital and reserve base of over Rs 2.3 billion. It is a member of all the three stock exchanges of the country that is Karachi, Lahore and Islamabad. The core activities of the company are equity sales/trading, equity/COT investments and corporate finance. Arif Habib Securities has recorded strong growth in all spheres of its operations with record profitability. Based on the criteria of its payout and return on equity, the company was included amongst the top 25 companies of the KSE during the first two years of its listings.
LEADING THE WAY
Arif Habib Investments leads the way by being the first in all of the following areas, and the only in most of them:
*Launch a fixed income mutual fund.
*Offer the first dedicated open-end equity fund in private sector.
*Launch the first closed end scheme structured as a unit trust, with the assets of the fund held by the trustee, under the new NBFC Rules 2003.
*Gave investors a choice of government bond funds with specific maturity ranges — short, intermediate, and long-term.
*Issue monthly Fund Manager's Report for the investors.
*Offer customized products for different classes of investors.
*Perform a daily audit of the NAV based prices.
*Mandatory change of auditors after every three years.
*Ongoing daily compliance audit carried out by the Funds' external auditors (A.F. Ferguson & Co.). The audit ensures compliance with the following:
•Non-Banking Financial Company (NBFC) Rules, 2003.
•Internal Policies and Processes
* Switching between funds through an automated software system
With two years of record growth under their belt, the company is striving hard to bring in new investment products, which would cater to the needs of both institutional and individual clients. While mutual funds still accounts for mere 5% of the total deposit base in Pakistan, the industry is likely to witness increasing amount of new money under its management. It is their endeavour, to adhere to the best practices and meet investors' expectations in the future as well.