Fixed rate mutual fund specified

ISLAMABAD: Securities and Exchange Commission of Pakistan (SECP) on Friday prescribed regulatory framework for fixed rate mutual fund to facilitate growth in the mutual funds industry.

The new category aims to contribute towards expanding investor base, and availability of a low-cost investment product with a low risk factor.

The fund is particularly important for those investors who prefer to have certainty of returns for their specific periodic needs. The scheme can also effectively serve institutional investors such as provident funds, pension funds, and gratuity funds for managing their liquidity.

A fixed rate mutual fund focuses on investments that typically pay a set and stable rate of return, such as government bonds, money market placements, certificate of deposits, etc. It designed to generate stable returns for passing the investors/unitholder, thus ensuring competitive return on their investments as compared to other fixed-return products. The regulator has prescribed the framework for the fund through its circular no. 3 of 2022. According to the regulator, it will allow flexibility in product design such as investment horizon, offering rates, and marketing segment-specific advertisements. The circular of new framework is available at SECP’s website.