Emlaak: Pakistan’s first mutual fund marketplace

A mutual fund marketplace to drive up investor interest through housing all options under one rood

KARACHI: Finance Minister Miftah Ismail formally inaugurated Emlaak Financials, a digital aggregator platform for mutual funds at the Central Depository Company (CDC) House here on Friday.

The platform is a first of its kind for the Pakistani market. The pilot for Emlaak had been launched in 2021 to help with Sahulat account opening which can be done through the platform. Following that, the CDC collaborated with the Mutual Fund Industry on ways to enhance the product and expand its offerings.

The full-fledged account opening feature has now been launched through the online investment portal which is the first of its kind in Pakistan allowing multiple funds from different AMCs to be offered to investors through a single platform.

What this means is an investor can open an easy Sahulat account or a regular Sarmayakari account.

What are mutual funds and why would anyone invest?

Through the mutual fund aggregator, investors can open their mutual fund accounts digitally from anywhere. They do not have to go to a brick-and-mortar office of an asset management company and can browse the number of options.

To define it very plainly, a mutual fund is a way of investing money alongside other investors in order to benefit from the inherent advantages of working as part of a group such as reducing the risks of the investment by a significant percentage. Essentially, you do not invest in an asset management company, you simply give them your money and pool that money with other like-minded individual and organizational investors, and then use that pool of money to invest for you.

It also gives the opportunity to single, small to medium-sized investors to put their money in high stake businesses in the form of a pool and participate in that part of the economy. Mutual funds do not just cater to individual investors, however. They also provide advice to large capital investors on where to park their money, provide management of excess assets for companies and also provide a place for companies to put their pension funds. In this way, these funds have a lot of money tied up in their investments both from large and small fish.

What difference does Emlaak make?

The concept of a digital aggregator for mutual funds has been fast gaining traction globally.

“This aggregator gives a financial supermarket experience to the investors, allowing them to compare funds across the industry and make wise investment decisions using the comparative analytics and unique tools offered by the platform,” says Shariq Naseem, Head of Product Development and Marketing at CDC.

In simpler terms easier to understand for the general public, one can compare Emlaak Financials to aggregator platforms of other industries, such as FoodPanda which is the aggregator of restaurants and food caterers.

While officiating the event, Ismail said, “It is very important for our economy that we should introduce such novel concepts which will promote the investment culture in Pakistan and provide an easy and informative platform to the investors thus enabling them to make wise investment decisions while giving them the convenience to open their mutual fund accounts digitally from anywhere without having to visit the brick & mortar offices of Asset Management Companies.”

Furthermore, the platform offers complete transaction facilitation for all types of transactions, including investments, redemptions, and conversions. Naseem adds that one can even undergo conversions across the industry. “This is the first of its kind in the local investment landscape!”

The platform offers consolidated portfolio tracking in a comprehensive dashboard and other various features such as account statement generation and return calculators, etc.

Microfinance has joined the chat

In order to increase product penetration, Emlaak has developed a mini-app for the EasyPaisa application. This is through a collaboration with Telenor Microfinance bank.

Naseem says, “This mini-app will open up the gateways of micro-investment avenues for EasyPaisa’s user base of 10 million plus users, thus promoting the savings and investment culture in Pakistan at the grass-root level and enabling the average Pakistani person to easily create a Sehl mutual fund account with just a click from his cell phone without having to submit any other KYC information.”

“Emlaak Financials has been envisioned to pave the way for the growth of the Mutual Fund Industry and promote the savings culture in Pakistan at the grass-root level.,” said Moin Fudda, Chairman of CDC’s Board of Directors.

Mutual fund penetration, however, in Pakistan has been low. While the process of signing up and investing in mutual funds has been made easier through the application, creating public interest will remain a challenge.

What does this mean for mutual funds?

The mutual fund industry, like the stock exchange itself, has been struggling with the onboarding investors. Drawing in public interest remains a challenge.

The concept of providing all options in one application to compare and be aware of all that is to offer is an attempt at making the market more transparent and investors more comfortable.

“The stunted growth of mutual funds can be attributed to lack of awareness among the general public and potential investors as well as the general inhibitions regarding investments,” said Naseem

However, he points out that there are all types of mutual funds available that cater to the investment needs and risk appetites of various investors. The options and clarity regarding them help fix the perception around mutual funds. However, like any financial product in Pakistan, without awareness and the right type of reach; expansive growth will remain a dream. 

 

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Ariba Shahid
The author is a business journalist at Profit. She can be reached at [email protected] or at twitter.com/AribaShahid

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