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Basit Munir
( 3 posts )

[15 Replies]
Aoa every one,

I am new to mutual funds and am not so sure where to start. I have visited http://www.Mufap.Com.Pk/ and have viewed the names the of mutual funds however having no prior experience with mutual funds i want to know a bit more from some one who has fist hand experience investing in mutual funds.

-how do i invest in a mutual fund? Can it be done online? Or do i have to visit the bank etc every time to invest or uplift?

-as we all know that the political situation in pakistan is usually unstable. If the market crashes, how much does it effect the mutual funds?

- if there is no market crash, what are the expected returns on the investments?

- is it better to invest in real estate or in mutual funds? Which one is better?

- is there any "specific" set of knowledge required before investing in mutual funds?

You answers are highly appreciated.

Thanks.

    1523 days ago In Comments
    Post Answer
    Kashif Kayan..
    (25 posts)
    Dear Mr Basit,



    If you speak about volatility and instability than no investment or business in this world is 100% stable at all times. The returns may vary one year after another.



    Investment means that you invest after evaluating the risks and returns over a certain period of time.



    I'll keep it short and answer your core questions.



    1. Mutual funds is basically a group of expert fund managers who are aware of the different market situations and know where and how to invest to get the best returns for themselves and for investors. Its like giving your money to an expert businessman who invests your money in different sectors to get best returns.



    2. In case of market crash they will still be able to make some timely decisions and prevent themselves and you from maximum loss. The history shows that markets all over the world have always recovered and bounced even higher to recover and give you profits in the long run.



    Diversify your investment which means put something in each sector so that you don't loose everything by putting money in only one.



    Mutual funds could be a Gold mine if your investment horizon is for long term 3-4 years.



    By the way which city do you live in and where in property you like to invest?





    Regards
      1471 days ago 

      Arshad
      (1159 posts)
      Usually banks offer mutual funds. There are 2 types as far as i know. One where your principal is safe and you get an annual return just like National Savings. You can ask a bank like Standard Chartered about their rates. Rates are not fixed and variable i think between 7-11% per annum. Sometimes it maybe possible you may not get a return at all depends on market conditions.



      the other funds are risky and may involve loss of your principal as they are mostly invested in stocks and commodities. They give the highest returns as far as 30% per annum. Again banks do such.



      Kashif Kayan is right the funds manager manage these funds, invest and give the return. You do not have to take any decisions. Such schemes are for those who have little funds i think less than Rs.10,00,000. If its more than this amount i think you can make decisions on your own while investing where you need to find a reliable company to trade with. They have their software on which you can trade and also provide guidance to assist in decision making but their brokerage fee is much much higher than the former. Even if u lock in at a price would cost you some dime.



      now i don't know about the mutual funds where the bank invests for you and give return i.e. Where they invest and in which stocks, commodities or currencies maybe. Right now its a deflationary environment especially for commodities where prices are falling so i think investing in commodities like Gold, Silver, Zinc, Wheat is not good for the next decade probably. I don't know about Pakistan but stocks in major Western countries have reached their peaks and most likely a downward trend maybe expected so maybe same goes for Pakistan. However, ask an independent expert on shares, commodities or stocks for investing.







      i think it will be better to invest in mutual funds with no loss of principal with interest ranging 7-11%. If the rates are better than National Savings its good then.



      or you can invest to try your luck in risky stocks but invest with lower capital because your capital will be at stake. And property is better as you don't loose your capital that often and the returns are also good both can be in the forms of capital gains and rental income. All that matters is where you invest and when you invest.
        1470 days ago 

        Halal
        (1 post)
        Do invest but stay away from interest as it will ruin your hard earned saving for this world and for Akharat hereafter
          1470 days ago 

          Kashif Kayan..
          (25 posts)
          There could be similarities between investing in property and mutual funds.



          For example, You hold the investment for a better profit for a while just like in mutual funds. The property price may rise or fall during a certain period or at least the period which you may have in your mind.



          But this is where similarities end. Mutual funds give you the freedom to capitalize any time, liquidate your money or reinvest for compounding. Compounding means that any profit you have earned during the year will be reinvested and the investment amount over time will increase thus multiplying your profits.



          In real estate you are only stuck with market price and need to find a buyer plus pay commissions to generally an opportunist estate agent which may not turn out to be a good deal after all with your money stuck for a few years and you not been able to make more investments into the already invested money.



          The new shariah compliant mutual funds are the best way to earn good profits of halal income. These funds are only invested in companies approved by the shariah advisors which prevent them from investing in any debt instruments and companies with unethical business activities such as muree brewery etc.



          The Islamic funds have given me an average profit of 37% each year which means that 5 million invested in 2011 are now 30 million in 2015. The awareness among masses about mutual funds and their potential is limited but with pakistan being considered as the new emerging market in region with plenty of foreign investment interest the future is brighter than ever.



          I am personally invested in mutual funds for the last five years and also a professional investment advisor in an asset management company.



          If anyone needs advise i am always ready to help.
            1470 days ago 

            Arshad
            (1159 posts)
            @ kashif kayani kindly provide some details about the funds you are talking about. The Islamic funds where do they invest. In commodities, currency, stock, real estate or shares. Which bank has given you 37% per annum.



            sir don't you think if you have the chance to earn 37% a year so you can also earn -ve % in some years compromising your principal. As far as i know mutual funds are riskier than real estate.
              1469 days ago 

              Kashif Kayan..
              (25 posts)
              Well... This is a common misconception amongst people who have less exposure to mutual funds and they tend to believe just by word of mouth.







              Equity funds are or stock funds are generally passive in nature and a long term investment say 4 to 5 years or above reduces the risk to almost nil. In fact there is no loss at all. The risk you are talking about is mitigated through time easily. After all you are hiring a professional fund manager who are more capable of making good decisions with inside informations about the markets and economy. They have their reputation and business at stake so they must give you something every year.







              I am investment advisor at JS investments and their Islamic fund has performed consistently since its inception. Their fund manager's report is easily available to download on their website







              www.jsil.com.







              In fact all fund manager's have their reports published and available on their websites.







              here is the link http://www.jsil.com/downloads/newsletter/FMR_JSIL_JUN_2015.pdf







              If you look in the islamic fund section which is page 7 it shows on the right column in allocation section where they invested and what %age they invested.







              Further in the monthly performance chart please look at the YTD (year to date) return for every year since 2011 to 2015 you will see returns of 42.90 - 38.43 - 45.51 - 25.84 - 40.23 percent returns for every year.







              so after five years your average return comes out to be around 37%.







              Hope this helps and if you or any of your peers are ever interested to invest i'll be happy to help.
                1468 days ago 

                Arshad
                (1159 posts)
                Yup i checked the report. Its a diversification into different company stocks with the emphasis on automobiles, cement, oil & gas. Performance is good. I want more details regarding this report as most of the things i don't understand so i hope you may help. Give me your email so i can discuss this further.

                There are also other products in the report so what about them?
                  1468 days ago 

                  Kashif Kayan..
                  (25 posts)
                  @ Arshad All the other funds have their motives mentioned in "investment philosophy" section of the report. These are all basically instruments of diversifying your investment.



                  Some invest in money market for short term goals, some invest in debt instruments like term deposits and bonds for short to medium term goals and some invest in equity for long term goals.



                  I can get you started and running. You can contact me 03225967940.



                  Regards
                    1468 days ago 

                    Arshad
                    (1159 posts)
                    Sir i live abroad so cannot call that is why asked for email
                      1468 days ago 

                      Ghalib
                      (13 posts)
                      I went through the Al - Meezan investment mutual fund report (a sister company of Meezan Bank), and their performance in the past years is quite good with exception of 2008 and 2009.







                      They provide different funds, some with No risk at all and capital protected with annual return (meezan islamic income fund) ranging from 8 to 11 percent yearly since 2008., some with minimal risk and some with high risk.







                      The high risk one such as Al meezan mutual fund gives the highest return such as 38 % in 2013 ,19% in 2012, 51 % in 2013 , 30% in 2014 and 22 % in 2015. However in 2008 and 2009 the returns were 0% and -32% respectively.







                      So before taking any decision do inquire about the performance of the funds weather JS, meezan or any other, during the recession period of 2008 2009.







                      My humble advice will be to go with a Balanced fund which is investing your capital not only in stocks but also in currency market equally so that if one sector crashes the other will give support.







                      Wassalamoalikum warahma
                        1468 days ago 

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