investor_education

Mutual Funds

A Mutual Fund pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciations realized are shared by its unit holders in proportion to the number of units owned by them. Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost.

The flow chart below describes broadly the working of a mutual fund: When one invests in a mutual fund, he purchases a certain number of units of the fund. The Fund Manager invests the pool of funds in a carefully selected portfolio of investments. The manager buys and sells those investments to maximize returns for the investors within the investment guidelines outlined in the prospectus. The fund’s value and the value of units can go up or down from day to day. Some funds will fluctuate more than others and an investor would like to consider this factor when he chooses a fund. The value of a fund’s units is updated daily and such information is available in newspapers or websites. Many factors influence the mutual fund performance, such as the value of underlying investments, changes in interest rates and other economic factors. Mutual Funds, according to their structure, may be open-end or closed end. To understand their meanings, please refer to Investor Glossary. Mutual Funds, according to their investment strategy, may be of different types. Common types of Funds offered in Pakistan include Income Fund, Balanced Fund, Equity Fund, Fund of Funds, Asset Allocation Fund and Shariah Compliant Fund. To understand their meanings, please refer to Investor Glossary.

Disclaimer: All investments in mutual fund are subject to market risks. Past performance is not necessarily indicative of the future results. Please read the offering Document to understand the investment policies and the risks involved.