What Is a Mutual Fund?
Mutual funds are often described as pooled investments which are held in trust on behalf of the individual investors. Each fund has a defined investment objective that determines the overall management of the fund and the types of investments that can be held in it. When you invest in a mutual fund, you purchase units in the fund, where each unit represents a share of the fund’s value.
A professional fund manager uses this money to buy stocks, bonds, or money market instruments that make up the fund’s portfolio of investments.
Think of it like a shared basket. You and thousands of other investors put money into the same basket. A professional manager decides what goes into that basket. Everyone benefits or shares the risk in proportion to how many units they own.
Concept
A Mutual Fund is a single portfolio of investments where investors put their money to be managed by an asset management company on behalf of its many investors. This allows each investor access to a professionally managed pool of funds.
The fund manager invests the fund’s capital in profitable avenues and attempts to earn a return for the fund’s investors. The income earned through these investments and the capital appreciation realised are shared by its unit holders in proportion to the number of units owned by them.
How a Mutual Fund Works
In Pakistan, mutual funds are licensed and regulated by the Securities and Exchange Commission of Pakistan (SECP). An additional industry body, the Mutual Funds Association of Pakistan (MUFAP), sets best practice guidelines for the sector. This layered oversight makes mutual funds one of the more transparent investment options available to Pakistani investors.
Benefits of Investing in Mutual Funds
Mutual fund investing offers important advantages, especially for individuals who prefer not to be involved directly in the hectic and time-consuming process of studying companies and then placing execution orders with brokers, tracking the price movements of stocks.
Professional Management
With Mutual Funds, a team of experienced and skilled professionals is responsible for the investment decision-making. The team consists of a dedicated fund management and investment research team which analyze the performance and prospects of companies and securities and selects suitable investments to achieve the objectives of the fund. ABL Funds has an experienced team of portfolio managers from diverse backgrounds with varying expertise and skills.
Diversification
One of the most important benefits of mutual funds is diversification, as it reduces investment risk of concentration. In simple terms, it can be explained through the phrase:
“Do Not Put All the Eggs in One Basket”
Mutual funds in general can hold many different investments across a broad cross-section of industries and sectors, offering a level of diversification often only achieved with larger portfolios. This diversification reduces the risk because seldom do all stocks decline at the same time and in the same proportion. Because of the diverse range, the ups and downs of any one security have less effect on the fund’s overall performance.
Though diversification can help reduce the risk and enhance the stability of investment, it does not guarantee loss prevention.
Liquidity
Liquidity simply means being able to access your money when you need it. Mutual funds are considered liquid investments because you can usually redeem your units as the need arises and have your money as per the time limits prescribed in the offering document of the fund. With mutual funds, you can buy and sell units easily, move money among different funds, and redeem.
Affordability
As a small investor, you may find that it is not possible to buy shares of companies with high share prices. Such companies have a low share base and high profits; as a result, investors allocate them higher price. Mutual funds’ access to pooled funds allows buying securities in the market in every price category.
Tax Credit Benefits
Investing in mutual funds can reduce your tax liability. Contributions to Voluntary Pension Schemes are eligible for tax credit. You can use the ABL Funds tax saving calculator to estimate your savings.
How Mutual Funds Work in Pakistan
Operations
Mutual fund schemes adhere to a specific investment objective while investing the money collected from investors as prescribed in the Offering Document. The investor is allotted units for the investment amount depending on the prevailing applicable NAV of the fund. The fund manager, depending on the investment objective of the scheme, decides the portfolio allocation.
The value of each unit of the fund, called the Net Asset Value (NAV) of the fund, is calculated based on the current market price of all the assets held by the fund.
The total assets held by the mutual fund at any point in time are called its Assets under Management (AUM). At launch, the AUM is equal to the collective funds of all the investors. With the passage of time, funds are invested in securities whose value changes on a daily basis, reflecting in profits/losses. At the same time, new investments keep coming in, and existing investors redeem, or dividends are paid to them.
Returns
Mutual fund schemes offer returns to the investors in the following ways:
Net Asset Value (NAV)
The price of one unit of a mutual fund is called the Net Asset Value (NAV). It is calculated at the end of every business day using this formula:
When the fund’s investments perform well, the NAV rises. When they decline, the NAV falls. You buy units at the current NAV and sell them at the NAV on the day you redeem.
Mutual Fund Categories in Pakistan (by Investment Objective)
Wide categories of Mutual Funds exist to cater to varying individual needs and differing circumstances and profiles.
Mutual funds can be grouped roughly into the following categories according to investment objective.
Equity Funds
Equity funds invest primarily in stocks listed on the Pakistan Stock Exchange. Their goal is long-term capital growth. These carry higher risk but also the potential for higher returns over time. They suit investors with a horizon of three years or more.
Index Tracker Funds
Index Tracker funds are a 100% replica of a particular index. These funds aim to provide investors an opportunity to track the performance of an index closely by investing in proportion to the constituent securities found in the index. Their goal is also long-term capital growth in line with that of the index. These carry higher risk but also the potential for higher returns over time. They are suitable for investors who may simply wish to mirror the risk and return profile that is achieved by investing in any particular index.
Money Market Funds
Money market funds aim to preserve capital while providing stable returns with low risk and volatility. They are suitable for short-term investors seeking safety, liquidity, and high certainty of returns. They primarily invest in highly rated government securities, bank instruments, Sukuks, TFCs, TDRs and other low-risk instruments.
Fixed Income Funds
Fixed income funds aim to provide regular income with potential for reasonable capital growth. They carry moderate risk, higher than money market funds but lower than equity funds. They primarily invest in government securities, banks, Sukuks, TFCs, TDRs and other debt instruments.
Balanced Funds
Balanced funds combine equity and fixed-income investments to provide both growth and income. They offer a moderate level of risk compared to pure equity funds. They are suitable for medium- to long-term investors seeking income and capital appreciation.
Asset Allocation Fund
Asset allocation funds aim to generate returns by investing across equity, debt, and other asset classes. Fund managers adjust the allocation between asset classes based on market conditions and outlook. They are suitable for investors who trust the fund manager to manage and balance investment risk.
Capital Protected Funds
Capital Protected funds aim to provide 100% capital protection, with the potential to earn a return that is better than that being offered by bank deposits or money market funds/ instruments. They are suitable for investors who do not wish to take any significant risk and are seeking the potential for improved returns above those available on money market/debt funds or bank deposits.
Voluntary Pension Schemes (VPS)
Voluntary pension funds aim to provide participants with a regular income at the time of retirement and at an age when one’s capacity to work is diminished, so that one is not dependent on other members of society, thus helping to ensure financial independence. They offer different investment options with varying levels of risk based on asset allocation. Investors can choose a scheme according to their age, retirement goals, and risk appetite.
Types of Mutual Funds (by Structure)
Open-Ended Mutual Fund
These funds continually create new units or redeem existing units on demand. The unit holders buy the units of the fund or may redeem them continuously at the prevailing Net Asset Value (NAV). The investor needs to contact the Asset Management Company, and the AMC will facilitate the particular transaction.
Close-Ended Mutual Fund
Closed-end funds have a fixed number of shares outstanding and do not redeem when investors want to sell; instead, the shares trade in the secondary markets (stock markets). Its market price is determined by demand and supply and is not directly tied to its net asset value. To buy or sell units of a closed-ended mutual fund, the investor shall need to contact the broker and not the AMC.
Open-Ended vs. Close-Ended Fund
| Feature | Comparison |
|---|---|
| Units Available | Open-Ended: Continuously issued Close-Ended: Fixed number at launch |
| How to Buy/Sell | Open-Ended: Contact the AMC directly Close-Ended: Trade on the stock market |
| Pricing | Open-Ended: Based on daily NAV Close-Ended: Based on market demand and supply |
| Liquidity | Open-Ended: Redeem any time Close-Ended: Depends on market buyers |
Most retail investors in Pakistan use open-ended funds. They offer flexibility: you can invest or redeem at any time without needing a broker.
How to Choose the Right Mutual Fund
Before investing in a mutual fund, you should consider following key factors. You should carefully read the Offering Document to ensure that you understand exactly what you are investing in.
- Identify your investment goals. Decide whether you need income, capital growth, or capital protection.
- Know your investment horizon. Short-term goals generally suit money market/fixed-income funds, while long-term goals may suit equity funds.
- Choose the right mutual fund: Select a fund based on your objective, risk appetite, and financial need.s
- Understand the risks: Mutual funds involve market, liquidity, credit, and price fluctuation risks, which are managed through diversification and professional management.
- Understand the costs: Consider management fees, brokerage, administrative expenses, trustee/custodian fees, regulatory charges, and other fund-related expenses.
- Balance risk and return: Choose an investment where the potential returns and level of risk match your ability and willingness to take risk.ABL Funds offers a risk profiler tool to help you understand your own risk appetite before you invest.
How to Start Investing with PKR 5,000
Getting started is straightforward.
- Determine your goal and risk profile. Use the risk profiler and set a clear investment objective.
- Choose a fund. Browse ABL Funds’ conventional offerings or Shariah-compliant offerings depending on your preference.
- Open an account. You can open the Digital Investment Account through ABL Funds or the myABL application directly, anytime, anywhere, in a fast, secure and completely seamless manner. You can also visit any Allied Bank branch across Pakistan. You can also visit an ABL Funds Savings Centre. Now open your ABL Funds directly from the comfort of your home through the ABL Funds App, fast, secure and completely seamless.
- Submit documents. You will need a copy of your CNIC, NTN, proof of employment or business, a Zakat declaration (if applicable) and a completed KYC form.
- Make your first investment. The minimum investment is PKR 5,000. You can invest as a lump sum or set up a Systematic Investment Plan (SIP) for regular monthly contributions.
- Track your investment. Monitor your NAV and fund performance through the monthly Fund Manager’s Report or the ABL Funds portal. You can also manage your portfolio through the ABL Funds App and now through the myABL App if you are an Allied Bank Customer.
Use the investment growth calculator to model how your investment could grow over time based on different rates of return.
ABL Funds: Complete Fund List & Minimum Investment Requirements
ABL Funds manages a wide range of open-ended mutual fund categories in Pakistan covering both conventional and Shariah-compliant ranges. All funds listed below are accessible through any Allied Bank branch or the ABL Funds digital portal, as well as the ABL Funds app and through the myABL App via the investment option.
Minimum investment amounts are sourced directly from official ABL Funds offering documents and may be updated from time to time; verify the latest figures at ablfunds.com before investing.
Conventional Offerings
Money Market Funds
| Fund Name | Investment Amounts |
|---|---|
| ABL Cash Fund | Initial: PKR 5,000 Subsequent: PKR 1,000 |
| ABL Money Market Plan-I | Initial: PKR 5,000 Subsequent: PKR 1,000 |
Money Market Funds are a highly liquid investment avenue, making them ideal for short-term parking of surplus funds for not only individual investors but also for institutional investors.
Income Funds
| Fund Name | Investment Amounts |
|---|---|
| ABL Income Fund | Initial: PKR 5,000 Subsequent: PKR 1,000 |
| ABL Government Securities Fund | Initial: PKR 5,000 Subsequent: PKR 1,000 |
| ABL Financial Sector Plan-I | Initial: PKR 5,000 Subsequent: PKR 1,000 |
Income Funds aim to deliver a regular and stable income while also targeting to preserve capital for the investors. These schemes generally invest in fixed income securities such as bonds, corporate bonds, government securities, and money market instruments.
Equity Funds
| Fund Name | Investment Amounts |
|---|---|
| ABL Stock Fund | Initial: PKR 5,000 Subsequent: PKR 1,000 |
Equity Funds endeavour to offer higher growth and competitive returns to the investors with a comparatively high level of risk, by actively investing in equity securities. These schemes are best suited for investors with a long-term investment horizon.
Asset Allocation Funds
| Fund Name | Investment Amounts |
|---|---|
| ABL Optimal Asset Allocation Fund | Initial: PKR 5,000 Subsequent: PKR 1,000 |
| Allied Finergy Fund | Initial: PKR 1,000 Subsequent: PKR 500 |
An Asset allocation fund provides investors with a diversified portfolio of investments across several asset classes. The asset allocation of the fund can be fixed or variable among a mix of asset classes. Popular asset categories for asset allocation funds include stocks, bonds and cash equivalents.
Shariah Compliant Offerings (Emaan Funds)
ABL Funds operates a parallel range of Shariah-compliant funds under its Emaan Funds umbrella. All Islamic funds are certified by Al Hilal Shariah Advisors and undergo annual Shariah audits. The range mirrors the conventional fund categories covering money market, income, equity, asset allocation and fund-of-funds options.
All Emaan Funds are certified Shariah-compliant by Al Hilal Shariah Advisors and undergo annual Shariah audits.
Shariah Compliant Money Market Funds
| Fund Name | Investment Amounts |
|---|---|
| ABL Islamic Cash Fund | Initial: PKR 1,000 Subsequent: PKR 500 |
| ABL Islamic Money Market Plan-I | Initial: PKR 5,000 Subsequent: PKR 1,000 |
Islamic Money Market Funds aim to provide regular and stable income through Shariah-compliant investments. Offering high liquidity, they are well suited for short-term investors seeking competitive returns while avoiding the volatility associated with equity markets.
Shariah Compliant Income Funds
| Fund Name | Investment Amounts |
|---|---|
| ABL Islamic Income Fund | Initial: PKR 5,000 Subsequent: PKR 1,000 |
| ABL Islamic Sovereign Fund | Initial: PKR 5,000 Subsequent: PKR 1,000 |
Shariah Compliant Income Funds aim to provide regular income through Shariah Compliant investments, with relatively lower volatility.
Islamic Equity Funds
| Fund Name | Investment Amounts |
|---|---|
| ABL Islamic Stock Fund | Initial: PKR 5,000 Subsequent: PKR 1,000 |
Islamic Equity Funds aim to deliver higher growth and competitive returns by investing primarily in Shariah-compliant equity securities. They are best suited for investors with a long-term investment horizon and higher risk tolerance.
Islamic Asset Allocation Funds
| Fund Name | Investment Amounts |
|---|---|
| ABL Islamic Asset Allocation Fund | Initial: PKR 5,000 Subsequent: PKR 1,000 |
Asset Allocation Funds provide diversification across multiple asset classes, such as equities, sukuk and cash, with allocations that may be fixed or actively adjusted.
Mutual Funds vs Bank Deposits: A Quick Comparison
Mutual Funds vs. Bank Fixed Deposit
| Factor | Comparison |
|---|---|
| Minimum Investment | Mutual Funds: PKR 5,000 Fixed Deposit: Varies by bank |
| Returns | Mutual Funds: Variable, market-linked Fixed Deposit: Fixed at time of deposit |
| Liquidity | Mutual Funds: High (open-ended) Fixed Deposit: Limited (lock-in period) |
| Professional Management | Mutual Funds: Yes Fixed Deposit: No |
| Diversification | Mutual Funds: Yes Fixed Deposit: No |
| Tax Credit Eligibility | Mutual Funds: Yes (VPS) Fixed Deposit: No |
| Regulated By | Mutual Funds: SECP Fixed Deposit: State Bank of Pakistan (SBP) |
Frequently Asked Questions
Q. What is a mutual fund?
A pooled investment vehicle that collects money from investors and invests it across different assets.
Q. What is an AMC?
A regulated company licensed by the SECP to professionally manage mutual funds.
Q. What are equity funds?
Funds that primarily invest in stocks for long-term capital growth.
Q. What are money market funds?
Low-risk funds that invest in short-term instruments to preserve capital and provide stable returns.
Q. What is a Shariah-compliant investment?
An investment that follows Islamic principles and invests in Shariah-compliant avenues.
Q. How are Islamic funds different?
They avoid interest and prohibited activities and invest only in Shariah-compliant securities.
Q. What is a Voluntary Pension Scheme?
A retirement savings scheme where contributions are professionally invested for future retirement income.
Q. What are the benefits of pension funds?
They help build retirement savings and may provide applicable tax benefits.
Q. Who can invest in pension funds?
Pakistani nationals with a valid CNIC can invest.
Q. What is the minimum investment?
The minimum investment is Rs. 5000
Q. What happens at retirement?
Up to 50% of the accumulated balance can generally be withdrawn tax-free, subject to applicable rules.
Q. What happens if I withdraw before retirement?
Early withdrawal is subject to applicable taxation.
Q. What is NAV?
NAV represents the value or price of one mutual fund unit.
Q. How is NAV calculated?
NAV = (Fund Assets − Fund Liabilities) ÷ Outstanding Units.
All investments in pension funds are subject to market risk. Past performance is not necessarily indicative of future results. Please read the offering documents to understand the investment policies and the risks involved.
Note: A.M.1 Rating was reaffirmed by PACRA as of October 24, 2025. Use of the name and logo of Allied Bank Limited as given above does not mean that it is responsible for the liabilities/obligations of ABL Asset Management Company Limited or any investment scheme managed by it.