- Country’s economy heading in the right direction and set to restore investor confidence
- Right time for local, overseas Pakistanis to invest in Mutual Funds and Capital Markets
Interview with Mohammad Shoaib — CFA, CEO, Al Meezan Investments
PAGE: Tell me something about yourself and your organization, please:
Mohammad Shoaib:Â I am the founding CEO of Al Meezan Investment Management Ltd, which is the first and the only full-fledged Shariah Compliant Asset Management Company in Pakistan. Al Meezan Investments is managing investments of over Rs.200 billion (as on June 30, 2021) across 18 mutual funds/pension funds and discretionary portfolios on behalf of over 145,000 clients. We have over 600 employees in the organization.
I hold an MBA degree from IBA in addition to being a Chartered Financial Analyst (CFA) charter holder. I am currently a director of CFA Society Pakistan, which was founded by me as President in 2002. I was recognized as the “Most Influential CFA Charter Holder” by CFA Institute Magazine, in 2006, and was awarded another accolade of “Volunteer of the Year: Lifetime Achievement Award” in 2019 by CFA Institute.
Professionally, I have been an active volunteer in many areas in the financial sector and some of my volunteer roles include:
- Nominee director of SECP on Board of Pakistan Stock Exchange
- Board member of Institute of Financial Capital Markets in Pakistan
- Chairman, Mutual Funds Association of Pakistan
- Board member Pakistan Institute of Corporate Governance
- Member of the Academic Board of Institute of Business Administration, Pakistan
- Member of the Central Bank’s Committee on Islamic Capital Markets
Currently, I am the board member, Advocacy and GIPS Chair for CFA Society Pakistan and Senior Vice Chairman, MUFAP. I have participated in various seminars, conferences and workshops across the globe during my30-year career in managing investments.
Al Meezan Investments:Â We began our journey in 1995. The objective of the journey was simple: to bring Shariah Compliant investment options to the people of Pakistan and make it their first choice. Al Meezan Investments, due to the continued trust our customers hold in us, is now Alhamdulillah one of the largest asset management company in Pakistan with a 44% market share in the Islamic mutual funds category and 18% market share in overall industry. As the leading Fund Manager in Pakistan, we offer a comprehensive range of Shariah compliant investment solutions. With an impressive track record of over 26 years, we cherish the status of being the only company in Pakistan with the sole mandate to provide Shariah complaint investment solutions to our valued clients. We are proud to maintain AM1 rating, which is the highest management quality rating in Pakistan. We also enjoy a unique position of being the only AMC in Pakistan to be awarded the highest management quality rating of AM1 by both VIS & PACRA (Credit Rating Companies). Additionally, we also have the privilege of managing the trust of one of the largest investor base in Pakistan with over 145,000 investors. Al Meezan has one of the highest levels of penetration among individual investors and has been leading the mission of making Shariah Compliant Investing a first choice for investors.
PAGE: Could you share with us details about the investment opportunities in Mutual Funds?
Mohammad Shoaib:Â Mutual Funds offer a more diverse platform for investment compared to Banks or any other Islamic or conventional investment avenue. The primary goal of mutual fund is to pool small savings and invest in a well-diversified portfolio of securities, which would allow the investor to significantly reduce risk. It offers something for everyone based on their investment goals and risk appetite. In addition to diversity, mutual funds also offer competitive returns and tax benefits to the investors making it an even more attractive offering.
As mutual funds are invested in multiple asset classes, the investors can invest their money in any avenue that best suit their risk profile and investment horizon. Long term investors can invest in high risk, high return equity funds like Meezan Islamic Fund while short term investors can take exposure in money market and income funds like Meezan Cash Fund, Meezan Sovereign Fund, Meezan Islamic Income Fund etc. which fall under the low/medium risk category for low to moderate returns.
Al Meezan is also the first Shariah Compliant Asset Management company to launch the Meezan Exchange Traded Fund that gives investor exposure to a basket of shares that can be traded directly at the stock exchange. Alhamdulillah, with the efforts of the Government and the Regulators, these investment opportunities are also available to overseas Pakistanis through the Roshan Digital Account initiative. Al Meezan is the first Shariah Compliant AMC in Pakistan to launch Mutual Fund Investment solutions for overseas Pakistanis.
PAGE: How would you comment on the investment made by the Pakistani diaspora in the financial sector?
Mohammad Shoaib:Â The success of the Roshan Digital initiative is known to all and the Government & Regulators deserve special appreciation for the initiative. Since its launch in September 2020 NRPs have remitted over $1.6 billion under the RDA initiative. The data released by the State Bank of Pakistan shows that total 181,556 accounts have been opened from 171 countries across the world by end-June 2021.
Under the RDA initiative the government has also allowed brokerages and Asset Management Companies to accept investments from Overseas Pakistanis. Alhamdulillah, Al Meezan was the first Shariah Compliant AMC to launch the RDA Investment Account in April 2021. Since inception we have opened more than 1500 accounts with over 125 million in AUMs. Alhamdulillah we are expecting that the economic recovery that started last year will continue in the future. Now is the time for both our local and overseas investors to invest in the growth potential of the country through investments in Mutual Funds and Capital Markets.
PAGE: Do you presume investment in mutual funds could spike in a couple of years down the line?
Mohammad Shoaib: The Mutual Funds Industry has shown tremendous growth over the last decade, where the number of Asset Management Companies (AMC’s), number of funds and type of funds have witnessed a dynamic expansion. Assets Under Management (AUM) for the mutual fund industry at the end of June of this current FY21stood at Rs. 1,050 billion, out of which Rs. 440 billion is managed by Shariah compliant vehicles, representing a market share of approximately42%.
However, I believe that this is just the tip of the iceberg and there is room for almost an exponential growth in the industry. Lack of awareness coupled with a lack of trust in the capital markets continues to be the biggest road block that has prevented the industry from reaching critical mass. Having said that, the winds are changing for the better. Our country’s economy is Inshaa Allah heading in the right direction which will restore investor confidence. The industry is working diligently towards increasing awareness leveraging technology and encouraging account opening and investments through digital channels, however we have a long way to go! I am confident that the next 5 years will witness double digit growth in the Mutual Fund Industry if the economic indicators continue to improve and the industry collaborates to increase the size of the pie instead of competing for the same investor base.
PAGE: What is your take on the investment made in the real estate and commodities vis-a-vis mutual funds?
Mohammad Shoaib:Â When people think of investing, real estate and commodities are usually the go to options. What the general investor needs to understand is that real estate is a very high-ticket item which comes with the inherent baggage of lack of liquidity and diversity, while commodities are also a volatile asset class with storage limitation. Mutual funds on the other hand offer investment opportunities to all kinds of investors be it small, large, individual or corporate. It levels the playing field for everyone by offering products based on the investors risk appetite and investment horizon. Time and again, data has proven that unlike some of the popular asset classes, mutual funds are capable of better returns with additional benefit of diversification, liquidity, expertise and convenience.