KNOWING VALUE AND BENEFITS OF MUTUAL FUNDS
Assistant Manager Marketing IGI Investment Bank
IGI Financial Services
July 28 - Aug 03, 2008
Financial markets worldwide are in the process of facing a huge transformation with investors opting for unconventional yet safe measures as a form of saving and investing for their future. Nowadays, mutual funds are being perceived as more attractive investment vehicles amongst individual investors internationally. This trend is highly pronounced in the developed markets, i.e. USA and Europe; however, the developing economies including Pakistan are no exception to this global trend. With Rs. 395.04 Assets Under Management in June 2008, the Mutual Fund Industry has shown an increase of over 691 percent in the last 5 years.
MUTUAL FUND INDUSTRY IN PAKISTAN ASSET UNDER MANAGEMENT
Surprisingly, mutual funds have been around much longer than most investors realize. The idea of pooling money together for investing purposes started in Europe in the mid-1800s; which later evolved into the first modern day mutual fund in the U.S. in 1924. Pakistan had an early start in mutual funds with an introduction of NIT in 1962 and the setting up of the ICP mutual funds in subsequent years. Currently, the mutual fund industry in Pakistan is in its nascent stage and has shown considerable growth in the number of AMCs along with the Assets Under Management; by increasing from Rs. 49 billion in 2003 to Rs. 395.04 AUM in 2008 spread over 35 AMC's.
By definition, a mutual fund is simply an investment tool that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. Most individuals generally lack substantial wealth to invest their personal funds and at low-risk directly in stocks and shares. They also lack the professional expertise and knowledge of economics, business, markets and individual companies to identify which stocks are worth investing in. In addition, keeping track of a personal portfolio, and with keeping an eye on taxation opportunities and obligations, can be very confusing, especially in the current investment climate. So, mutual funds can offer major advantages by offering small investors access to professionally managed, diversified portfolios of equities, bonds and other securities, which would be quite difficult to create with a small amount of capital. Each shareholder participates proportionally in the gain or loss of the fund making the investment avenue both affordable and feasible for its investors.
Investors have literally thousands of choices when it comes to investing in mutual funds, ranging from Equity, Balanced, Hybrid, Money Market, Income etc. These funds vary in terms of returns they offer and the risk factor involved when investing in these funds. For example, equity funds offer a higher rate of returns and are directly linked to the stock market therefore pose a higher risk to investors. Balanced funds provide a balanced mixture of safety, income and capital appreciation which come with medium risk. Income funds are ideal for conservative investors and retirees and provide current income on a steady basis. Income funds generally come with low risk attached. With all these options, choosing the right funds and the right asset management company to manage your funds is the key to achieving financial success.
In this rapidly growing industry where a number of funds are being launched on a regular basis and with the growth prospects of the asset management companies, IGI Funds Ltd. was established in 2006 as a Group company of the IGI Financial Services and the Packages Group. It is registered as a Non-Banking Finance Company licensed by the Securities and Exchange Commission of Pakistan to provide Asset Management and Investment Advisory Services.
The company offers and manages open-end mutual funds in various asset classes that are professionally-managed by a team of trained fund managers who assist potential investors by pooling their monies in stocks, bonds, short-term money market instruments, and/or other securities. With hands-on experience of money markets and accurately estimated minimized risk factors, the company is winning partnerships with a growing base of customers.
'IGI Income Fund' was the first Fund launched by the IGI Funds in April 2007, and has attracted a large number of well-known institutions, high net-worth individuals and retail clients from all over the country. With the Fund performing at an optimum high, the company's reputation as a strong and well-managed organization is fast gaining popularity amongst short and long-term investors. Since its inception, the IGI Income Fund has offered consistent returns of 9.5 % and above with the sole criterion of minimizing risk for its investors while constructing a liquid portfolio and providing competitive returns. The Fund has a diverse portfolio which includes a range of liquid fixed income instruments: bonds, COD's, COI's, Term Deposit Receipts (TDRs), Continuous Funding System (CFS) and other debt instruments. Each instrument in IGI Income Fund's portfolio has a rating of A and higher which shows the strength and potential of the Fund & more recently, BMA Research has also acknowledged IGI Income Fund as a top performing fund.
Other benefits to the investor through IGI Funds include complimentary personal accident insurance to investors of IGI Income Fund as a value-added service. The insurance provides coverage for up to Rs.100,000 for personal accidents such as accidental death or permanent disablement to IGIIF investors. IGI Funds also updates research on its website along with offering a facility for investors to view all their transactions online as and when they require.
IGIIF is accessible to both large and small investors with a minimal amount of Rs. 5,000 to start your investment. With the help of professional fund managers, the small investment amount can flourish into a heftier amount within only a few months. For example, if you would have invested Rs. 50,000 in the beginning of the year, you would have gained Rs.4,905 by the year end with a YTD Return of 9.81%. Investors will have an opportunity to choose from a broader portfolio of funds as the company aims to launch its 'Stock Fund' & 'Islamic Income & Growth Fund.' in the near future. The fund managers at IGI Funds through their expertise will help develop clients' portfolio by investments in its equity and fixed income products & will also offer a broad range of investment strategies, allowing clients to choose the fund which best matches their risk profiles.
This brings us to the importance of having access to sound investment advice. A good fund manager specializing in providing quality advice and prompt service would be equipped to help you build and manage your investment portfolio. The importance of such an expert at a time where there are so many choices with a growing number of AMC's cannot be overstated. IGI Funds is such an Asset Management Company that can provide simple cash management solutions which best suit your financial needs. To find out more, simply by log on to www.igifunds.com.pk or just dial toll free at 0800-234-34.