The size of Pakistan’s mutual fund sector has surged nearly sevenfold over the past six years, with assets under management (AUM) rising from Rs578 billion in 2019 to Rs3.93 trillion by June 2025. This growth has been fueled by robust performance in both conventional and Shariah-based funds, according to the latest figures from the Securities and Exchange Commission of Pakistan (SECP).
According to The News, conventional funds grew 5.2 times to Rs2.206 trillion during this period, while Shariah-compliant funds saw a more significant increase of 6.7 times to Rs1.726 trillion. Shariah-compliant products now constitute 44% of the industry, up from 39% in 2019, reflecting a growing investor preference for Islamic finance.
After a temporary peak of Rs4.43 trillion in December 2024, mutual fund deposits dropped by more than half a trillion rupees by June 2025. A senior SECP official attributed this decline to a new federal tax on banks with an advance-to-deposit ratio (ADR) below 50% as of December 31, 2024. To meet the ADR requirement, banks encouraged large clients to temporarily shift their funds into mutual funds, which artificially boosted the sector’s AUM. Once the deadline passed, the funds flowed back into the banking system.
The SECP official stated that the regulator is now holding focus group sessions with industry stakeholders to plan the next phase of reforms. Key priorities include digital transformation, the introduction of exchange traded funds (ETFs), and the launch of infrastructure and ESG-based funds to attract sustainable investments. The SECP also plans to revamp distribution models, promote systematic investment plans (SIPs) for retail savers, and enhance financial inclusion, with a special focus on women investors.
Market analysts believe the sector’s growth has been driven by a combination of low bank deposit returns, increasing financial literacy, and regulatory support. However, they warn that sustaining this momentum will require innovation and broader accessibility. With mutual fund penetration still low compared to regional peers, the SECP’s reform agenda signals a push to deepen capital markets and redirect domestic savings into productive investments, a move that could support Pakistan’s wider economic development goals.
Retail investors now hold 39.2% of Pakistan’s total AUMs in 2025, an increase from 38% in 2019, while the share of corporate investors has slightly decreased to 61%. SECP data also shows a widening retail participation, with 768,769 individual investors and 6,361 corporate investors now in the market.
