Pakistan’s mutual fund industry has grown nearly seven times over the past six years, with total assets reaching Rs3.93 trillion by June 2025, up from Rs578 billion in 2019, driven by strong demand in both conventional and Shariah-compliant investments, according to fresh data from the Securities and Exchange Commission of Pakistan (SECP).
Conventional funds expanded 5.2 times to Rs2.206 trillion, while Shariah-compliant funds surged 6.7 times to Rs1.726 trillion, narrowing the market share gap. Shariah-compliant products now constitute 44% of the industry, up from 39% in 2019, reflecting a growing investor preference for Islamic finance.
Mutual fund deposits, which had jumped from Rs2.70 trillion in June 2024 to Rs4.43 trillion in December 2024, fell by over Rs500 billion to Rs3.93 trillion by June 2025. A senior SECP official attributed the decline to the federal government’s incremental tax of up to 16% on banks with an advance-to-deposit ratio below 50% as of December 31, 2024. “To meet the Advance-to-Deposit Ratio requirement, banks had to either expand lending or reduce deposits. To ease deposit pressure, they encouraged large clients to shift funds into mutual funds, temporarily boosting mutual fund assets. Once the ratio target was met, much of that money flowed back into the banking system after December 31,” the official explained. The decline represented around 10% from December 2024 to June 2025, though assets still recorded a substantial year-on-year increase.
The SECP has been engaging with industry stakeholders through focus group sessions to map the next phase of reforms. Key priorities include digital transformation of mutual funds, introduction of exchange-traded funds (ETFs), and launching infrastructure- and ESG-based funds to meet sustainable investment demand. The regulator also aims to revamp mutual fund distribution models, promote systematic investment plans (SIPs) for retail investors, enhance financial inclusion—particularly for women—and strengthen prudential limits, governance, and transparency standards to protect investors.
Market analysts say the sector’s growth has been supported by low bank deposit returns, rising financial literacy, and regulatory backing. However, they caution that sustaining momentum will require continued innovation, wider accessibility, and robust oversight.
Retail investors now hold 39.2% of total Assets Under Management (AUMs) in 2025, up from 38% in 2019, while corporate investors’ share fell slightly to 61% from 62%. Overall, 56% of AUMs are conventional and 44% are Shariah-compliant. The SECP data also indicates 768,769 individual investors and 6,361 corporate investors in the market, highlighting growing retail participation in mutual funds and the broader capital markets.
