For the first time in its history, the asset management industry in Pakistan is managing more than $10 billion. A pittance though it may be by global standards, this feels like a milestone worth marking for the industry. Except that it is hard to get excited about the industry reaching milestones when, by some measures, it has yet to surpass its own records set in 2008.
Measured in assets under management (AUM), whether in rupees or dollars, the industry is larger than it has ever been, and has been growing at a reasonably rapid rate over the past two decades. Measured as a percentage of the total size of the economy (gross domestic product, or GDP) or even as a percentage of total bank deposits, and the industry is still below levels it was able to surpass in 2008.
Despite a sharp rise in AUM over the past five years, the industry is still a relatively small corner of Pakistan’s financial services sector, and of the economy, despite what appear to be strong undercurrents favouring the industry, not least of which is a regulator that seems keen on helping the industry grow.
So why has the industry not yet taken off? Why does it even matter to the Pakistani economy that it grow? And what, if any, circumstances would need to change in order for the industry to start growing?
Disclosure: I am the CEO of Elphinstone, a Registered Investment Advisor regulated by the United States Securities and Exchange Commission, and of Trikl Pakistan, a company in the process of seeking a digital asset management license from the Securities and Exchange Commission of Pakistan, having recently concluded a stint in the SECP’s regulatory sandbox.
Is this article going to be me talking my book? Probably. But it might still be worth your time.
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