Investors favour risk-free funds

Most investors have parked their savings in risk-free money market and income funds through mutual fund companies, keeping their investment notably low in the riskier Pakistan Stock Exchange (PSX). This is despite the fact that the bourse has outperformed all assets, offering a historically high return on investment of 90% in the first 11 months of the outgoing fiscal year 2023-24. The money market and income funds have offered returns on investment of up to 20%, according to the Mutual Funds Association of Pakistan (MUFAP). The assets under management (AUM) at the mutual fund companies soared to Rs2.41 trillion in March 2024, rising by 57.5% from Rs1.53 trillion in March 2023. A large number of investors, mostly individuals, parked their savings amounting to Rs1.19 trillion in the money market (mostly in T-bills) through the asset management companies (AMCs) in March 2024. They made the second largest investment of Rs692 billion in income funds (instruments like Pakistan Investment Bonds/PIBs and term finance certificates/TFCs). They invested a total of Rs181 billion in equity (at companies listed at Pakistan Stock Exchange/PSX) in March 2024, which remained significantly low compared to the other assets.