February 11, 2022: To facilitate growth in the mutual funds industry, the Securities and Exchange Commission of Pakistan (SECP) has prescribed the regulatory framework for Fixed Rate Mutual Fund through Circular No 3 of 2022. The new category will contribute towards expanding the investor base, leading to the availability of a low-cost investment product with a low-risk factor, said a press release issued on Friday.
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, certificates of deposits etc. It is 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 fixed-rate mutual fund is particularly important for those investors who prefer to have certainty of returns for their specific periodic needs. This scheme cal also effectively serve institutional investors such as provident funds, pension funds, gratuity funds for managing their liquidity.
The regulatory framework specified by the SECP allows flexibility in product design such as investment horizon, offering rates and marketing segment-specific advertisements.
