Pakistan’s mutual fund industry has expanded dramatically, with assets under management (AUM) surging from Rs578 billion in 2019 to Rs3.93 trillion by June 2025—a nearly sevenfold increase—according to the Securities and Exchange Commission of Pakistan (SECP). The growth was driven by strong demand for both conventional and Shariah-compliant funds. Conventional funds grew 5.2 times to Rs2.206 trillion, while Islamic funds rose 6.7 times to Rs1.726 trillion, increasing their market share from 39% to 44% over the period.
Despite the long-term growth, mutual fund deposits saw a sharp decline from Rs4.43 trillion in December 2024 to Rs3.93 trillion in June 2025. An SECP official attributed this drop to banks adjusting their advance-to-deposit ratios (ADR) following a new 16% tax on lenders with ADRs below 50%. “Banks temporarily shifted deposits into mutual funds to meet regulatory requirements, but funds flowed back after December,” the official explained. Despite the dip, the sector still posted significant year-on-year growth.
The SECP is now focusing on reforms to sustain momentum, including digital transformation, introducing exchange-traded funds (ETFs), and launching infrastructure and ESG-focused funds. Other priorities include improving distribution models, promoting systematic investment plans (SIPs) for retail investors, and enhancing financial inclusion—particularly for women. The regulator also aims to strengthen governance and transparency standards to protect investors.
Analysts credit the sector’s expansion to low bank deposit returns, rising financial literacy, and regulatory support. However, they stress the need for innovation and broader accessibility to maintain growth. Retail investor participation has increased, now holding 39.2% of AUMs compared to 38% in 2019. With 768,769 individual investors and 6,361 corporate investors, Pakistan’s mutual fund market shows deepening retail engagement—a trend the SECP hopes to accelerate to boost capital markets and economic development.