An Asset Management Company is an Investment Company that manages investments made by investors.
A systematic approach for apportioning the portfolio into stocks, bonds and cash, and/ or other asset classes or categories. Factors such as age, investment horizon, risk tolerance, and portfolio size play an important role in determining an individual’s asset allocation.
Assets under Management (AUM) are the total value of all the investments currently being managed by the Fund.
The Fee charged by the Asset Management Company (AMC) for services rendered towards management of the Fund. The Fee quoted on an annual basis is calculated as a percentage of net assets under management.
A record of transactions and their effect on account balances over a specified period of time, for a given investment account.
A sales charge is paid when an individual sells a mutual fund.
A mutual fund is composed usually of a balanced mix of both stocks and fixed income securities.
Earnings on an investment’s reinvested earnings.
Commodity Funds invest in commodities, for example, gold, silver, crude oil, natural gas, etc., and may provide excellent diversification and inflation protection to the average investor’s portfolio.
The danger international investors face is that a nation where they have invested will suffer severe economic or political problems or even a natural disaster.
The danger is that the issuer of a corporate bond will experience financial difficulties in satisfying its obligation, thus causing deterioration in credit worthiness, perhaps even a default. Treasury securities are usually considered free of this risk.
The risk, faced by foreign investors, is that the currency in which their investment is denominated may depreciate in value in relation to their home currency.
Usually, an independent organization is responsible for handling, safekeeping, and other custodial matters that are related to the securities belonging to the client.
It is the profit that results from investments into a capital asset, which exceeds the purchase price. It is the difference between a higher selling price and a lower purchase price.
An entity or individual authorized to sell the units of open-end mutual funds on behalf of the AMC.
The strategy of spreading money among different securities usually belonging to different asset classes in order to reduce risk.
A share of profits received by a unit holder/shareholder in a mutual fund. If it is declared in the form of cash, then it is called a cash dividend and if it is declared in the form of additional units then it is called stock dividend.
A Mutual Fund that invests in equity securities.
A period that a company uses for accounting purposes and preparing financial statements. The fiscal year may or may not be the same as a calendar year.
The person(s) responsible for devising and implementing a fund’s investing strategy and who actively takes part in its ongoing management, with a view to achieving the Fund’s Investment Objective.
A sales charge is paid when an individual buys a mutual fund. The front-end load is composed of Sales load and transaction cost (if any).
Periodic information is provided by the fund manager to the investor regarding the performance of the funds, related markets, and future outlook.
These are funds that invest in other mutual funds.
The type of units opted for by the investor entitles him to receive the dividend in the form of bonus units.
A popular investment style whereby fund managers identify companies showing good or attractive earnings prospects.
A fund that replicates a particular market index such as the KMI 30 Index by holding many if not all of the same stocks and in the same proportion as in the benchmark index.
A fund that invests in fixed-income instruments with the main objective to provide current income rather than growth of capital.
A dividend announced during a fiscal year is an interim dividend.
The type of units opted for by the investor entitles him to receive the dividend in the form of cash.
It highlights what the Fund aims to achieve. It is usually a concise yet elaborate statement explaining to investors where the Fund will invest and what it seeks to achieve through such investments.
The danger is that the returns from one’s investments will fail to keep pace with the increase in the general price level in the economy. This is usually a major problem with Fixed Income investments where investment return generally lags behind an increase in Inflation, thereby resulting in a decrease in return in real terms.
The sale of a company’s shares or a mutual fund’s scheme to investors for the first time.
KSE 100 is designed to provide investors with a sense of how the Pakistan equity market is performing. It simply consists of the top 100 companies listed on the PSX that have the highest market capitalization.
Tracks the 30 most liquid Shariah-compliant companies listed at PSX and are weighted by float-adjusted market capitalization.
Liquidity generally refers to the notion of how readily an asset or security or investment can be converted to cash. Open-end mutual funds generally offer a high degree of liquidity to their investors.
This is a risk that emanates from the fact that particular security may not be easily bought or sold without impacting its price.
A % charge by the Fund when an investor buys or sells units in the Fund.
Market Risk is a risk that may affect the overall financial market. Some sources of market risk include, recessions, political turmoil, changes in interest rates, etc.
A fund that invests in short-term Shariah-compliant securities including banks, DFIs placements, commercial papers, and cash. As the safest of all funds, these portfolios have a stable Net Asset Value (NAV).
The total value of a fund’s cash and securities is less than its liabilities or obligations.
The Net Asset Value is the price of a unit of a fund found by subtracting the fund’s liabilities from its assets and dividing by the number of units outstanding.
The official document describes a mutual fund to prospective investors and solicits investment from them. All necessary details for a prospective investor are contained in the Offering Document (OD).
The price at which a mutual fund’s shares are bought by the investor.
The group of securities that are held in a Fund. The term is used as a synonym for the fund.
The process of periodically revising a portfolio to restore the asset-class weights for stocks, bonds, and cash to their long-run target values. This is done by selling shares in appreciated asset classes and buying shares in under-represented categories.
The price at which a mutual fund’s shares are redeemed (bought back) by the Fund.
To en-cash mutual fund shares by selling them back to the fund. Mutual Fund units may be redeemed on any business day.
The investment technique of investing a particular amount on a regular schedule, regardless of the unit price.
The danger is that a particular industry such as, software/biotechnology will plunge.
SECP is the Regulator for Asset Management Companies in Pakistan.
The Shariah advisor is a person or institution who is appointed to ensure strict Shariah compliance in all areas of the mutual fund’s operations.
A share of ownership or equity in a corporation.
A service enabling you to have a designated sum of money transferred regularly from your bank account or paycheck to the Fund account. SIP enables an investor to benefit from compounding and Rupee cost averaging.
It is the market in which shares of publicly held companies are issued and traded either through exchanges or over-the-counter markets.
The total return is the change in the value of an investment over a given period, assuming reinvestment of any dividends and capital gain distributions, expressed as a % of the initial investment.
The organization is employed by a mutual fund to prepare and maintain records relating to investors’ accounts.
An independent entity authorized to safeguard the unitholders’ best interests with respect to the Funds.
A formal document that outlines the terms of a Trust agreement between the Trustee and the Asset Management Company.
These schemes seek to provide participants a regular Halal Income stream after retirement when one can no longer earn regular income to support their living so that they are not dependent on other members of the society.
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