The Securities and Exchange Commission of Pakistan (SECP) has unveiled a comprehensive framework for standardized performance benchmarks for Asset Management Companies (AMCs) managing Collective Investment Schemes (CIS). This move is aimed at enhancing transparency, consistency, and comparability in performance disclosures across the asset management industry, empowering investors to make more informed decisions.
Under the new regulations, benchmarks have been introduced for both Conventional and Shariah-compliant schemes. These benchmarks even though are different, would act like the stock market indexes such as the KSE-100.
The Mutual Funds Association of Pakistan (MUFAP) will play a central role in this initiative by calculating and disseminating these benchmarks along with peer group average returns across various categories. These benchmarks will be updated and shared on a monthly basis, offering investors clear insights into the performance of mutual funds aligned with specific investment strategies.
AMCs are required to adopt the new benchmarks within one month and revise their offering documents and Fund Manager Reports (FMRs) accordingly. To ensure a smooth transition, AMCs must report both the old and new benchmarks for a three-month period before fully aligning with the prescribed standards.
MUFAP will also oversee compliance with the new framework, publishing category-specific benchmarks using weighted average rates. In addition, MUFAP will disseminate daily updates on PKISRV (Pakistan Investment Strategy Risk-free Value) rates for varying timeframes, including one-month, three-month, six-month, nine-month, and one-year durations. These rates will be calculated either directly or through interpolation methods prescribed under the new rules.
For Conventional and Shariah-compliant Fund of Funds CIS, investments in cash or near-cash instruments will be classified as placements in Money Market CIS to ensure accurate benchmark returns. The highest available savings account rates within each category will also be incorporated into MUFAP’s calculations.
A significant addition to the framework is MUFAP’s commitment to publish a monthly ranking of all CIS based on their performance over the past 365 days. These rankings will be made publicly available on MUFAP’s website, offering investors greater clarity in evaluating fund performance.
The SECP stated that the implementation of these benchmarks is designed to align Pakistan’s mutual fund industry with global best practices, fostering greater trust and transparency in the sector. This step is expected to benefit investors by creating a more robust and accountable investment environment.
