RDA investment in mutual funds almost doubles in one year

KARACHI: Overseas Pakistanis' investments in mutual funds through the Roshan Digital Account (RDA) reached Rs4.026 billion as of March 2024, nearly double the value from last year.

According to data from the Mutual Funds Association of Pakistan (MUFAP), RDA account holders’ investments in mutual funds managed by asset management firms increased by 96.5 per cent between March 2023 and March 2024.

The total amount invested by the end of March 2023 was Rs2.049 billion.Analysts say that the rise in non-resident Pakistanis' (NRPs) mutual fund investments can be attributed to the large returns provided by different asset management companies as well as a smooth digital investing and disinvesting procedure.

NRPs were able to use their RDA accounts to digitally invest in mutual funds. With everything under one roof, mutual funds provide investors exposure to stocks, fixed income, money market, commodities, and real-estate markets. However, compared to other channels like the stock market and Naya Pakistan Certificates, the amount invested in mutual funds through RDA is smaller.

This week, the data issued by the SBP showed that RDA inflows reached $7.831 billion between September 2020 and April 2024. Of the total amount received, $4.925 billion has been used locally, and $1.587 billion has been repatriated. The net repatriable liability was $1.320 billion after this.

SBP data shows that $873 million in net investments were made through RDA between September 2020 and April 2024. Around $317 million was invested in conventional NPCs, whereas $523 million was invested in Islamic NPCs; $33 million was invested in the stock market.

The MUFAP’s data also showed that all assets managed by the mutual fund industry increased to Rs2.410 trillion as of March, up 1.15 per cent from the previous month.The money market asset under management (AUM) rose by 3.37 per cent to Rs1.199 trillion, while the equity AUM inched up by 1.20 per cent to Rs181 billion.

According to analysts, the rise in AUMs is mainly due to the elevated interest rates during the last couple of years which attracts investments in fixed income/money market.The equity assets under management did well due to the remarkable performance of the stock market. The rally in the local bourse started in the second half of last year after Pakistan secured final approval for a short-term $3 billion bailout package from the IMF in July.