General FAQs

An investment is an asset or item that is purchased with the expectation that it will generate income or appreciate in the future. Investing has become important due to the following reasons:

• Inflation reduces the value of your money

• You are going to live longer

• You have a substantial standard of living to maintain

• Your families are getting smaller and nuclear

• Planned expenses

Now you can monitor your investments on the go through our mobile app!

The time value of money is the idea that money available at the present time is worth more than the same amount in the future due to its potential earning capacity. This core principle of finance holds that, provided money can earn interest, any amount of money is worth more the sooner it is received.

Investments can be packaged into a number of structures which seek to enhance, protect or maximize the behaviors and returns from the following main asset classes:

• Cash

• Fixed Interest

• Shares

• Property

• Derivatives

In general, the term risk refers to the probability of some undesirable event. The element of risk that troubles investors is the possibility of downside fluctuations in value and return. Following are the various types of risks associated with different investments:

Market Risk: All mutual funds are subject to market risks, that is, the portfolio may face a decline in prices. Generally, the fluctuation in prices is caused by general economic and market conditions, the volatility in currency or interest rates, the instability in regional or global markets.

Interest Rate Risk: All the instruments in a mutual fund are marked to market on daily basis, so a change in the interest rate has a subsequent effect on the value of investment. The fall in interest rates will have a positive impact on the prices of held securities.

Inflation Risk: The risk that the cash flows from an investment won’t be worth as much in the future because of changes in purchasing power due to inflation. The risk of money losing its purchasing power or increase in interest rate during the investment period may also result in reduced prices of held securities.

Currency Risk: When there is a change in price of one currency against another than the type of risk that arises is Currency Risk. When an investor has exposure to foreign currency or foreign-currency traded investments, he is likely to come across a potential risk of loss from variable foreign exchange rates.

Liquidity Risk: Risk that comes from the lack of marketability of an investment that cannot be quickly bought.

An investment vehicle that is made up of a pool of funds collected from investors for the purpose of investing in various asset classes, including stocks, bonds, money market instruments, etc.

There are two types of Mutual Funds:

Closed-Ended Mutual Funds: Closed-end fund is a publicly traded investment company that raises a fixed amount of capital through an initial public offering (IPO). The fund is then structured, listed and traded like a stock on a stock exchange.

Open-Ended Mutual Funds: An open-end fund is a type of mutual fund that does not have restrictions on the amount of shares the fund will issue. If demand is high enough, the fund will continue to issue shares no matter how many investors there are. Open-end funds also buy back shares when investors wish to sell.

Since its beginning, mutual funds have been a widely held investment vehicle used by investors. Their simplicity in use along with other traits are listed below. Professional Management: When one goes for mutual funds, it means that you are also choosing a professional money manager. Rather than having to thoroughly dig down and research into every investment, you have a money manager who can do the heavy lifting for you. These professional fund managers are employed by AMC who undergo careful research before choosing an investment for the mutual fund or monitor performance of the assets.

Diversification: Investment diversification is easily achieved by investing through a mutual fund, irrespective of size of investment. Assets of a mutual fund are spread across a range of companies and industry which minimizes the risk of loss due to poor performance of a particular company or industry.

Affordability: Mutual fund as an investment vehicle is also available for small investors who do not have significant amounts of money to invest.

Liquidity: Most of the funds at present are formed under an open-end structure which offers fund investors to timely redeem their investments.

Transparency: The performance of a mutual fund is carefully reviewed by various publications and rating agencies, making it easy for investors to compare fund to another. As a unit holder, you are provided with regular updates, for example daily NAVs, as well as information on the fund's holdings and the fund manager's strategy.

The value of a unit of the mutual fund, known as the net asset value per share (NAV), is calculated by dividing net value of assets by the number of units issued and currently outstanding. Buying and selling into funds is done on the basis of NAV-related prices.

Mutual fund often charges an entry and/or exit fee. These are also referred to as sales loads. The proceeds of such charges/ load help the AMC market the fund and cover distributions costs.

• Front-end load is a charge when investors purchase units.

• Back-end load is a charge when investors redeem/sell their units.

Redemption: Account holders can realize their gains by redeeming/selling their units to the asset manager. Any capital gain on investment is subject to tax based on their investment periods.

Dividend The Asset Management Company declares a payoff to the unit holder from its periodical earnings.

Cash dividend Payout will be subject to withholding tax according to Income Tax Ordinance, 2001.

Tax rebate is a benefit that one obtains for an investment in an open-end mutual fund. Salaried and non-salaried individuals can claim tax rebate on their income based on the applicable rates of income tax under section 62 of the Income Tax Ordinance, 2001.

Following are the constitutive documents of a mutual fund:

Trust deed

Trust deed is a principal document for formation, and management of the mutual fund that is executed between the AMC and the trustee. The trust deed specifies the responsibilities of the trustees and the Asset Management Company which need to be strictly adhered to by each concerned party

Offering Document

An offering document of a mutual fund is a fairly comprehensive document covering at a minimum the following: • Regulatory Approvals • Constitution of the Scheme • Objectives and investment Policy • Category and Benchmark of the Fund

Following is the list of governing ordinances for mutual fund establishment:

• Non-Banking Finance Companies (Establishment & Regulation) Rules, 2003 (the Rules)
• Non-Banking Finance Companies and Notified Entities Regulations, 2008 (the Regulations)
• The Companies Ordinance, 1984 (the Ordinance) and Circulars and Directives issued by the SECP under the provisions of the Ordinance.

According to the Income Tax Ordinance, 2001 Capital gain arising from disposal/ redemption of securities (including Mutual Funds) shall be chargeable to tax at the rates specified in Division VII of Part 1 the First Schedule of Income Tax Ordinance, 2001.A mutual fund or a collective investment scheme or a REIT scheme shall deduct Capital Gains Tax at the rates as specified below, on redemption of securities as prescribed, namely:

Category Application Rate Individual and Association of Persons(AOP) 10% for Stock funds 10% for other Funds Company 10% of stock funds 25% of Stock funds

Provided further that in case of a stock fund if dividend receipts of the fund are less than capital gains, the rate of tax deduction shall be 12.5%. Moreover, no capital gains tax shall be deducted, if the holding period of the security is more than four years. To add on, where a person sustains a loss on disposal of securities in a tax year, the loss shall be set off only against the gain of the person from any other securities chargeable to tax under this section and no loss shall be carried forward to the subsequent tax year.

A fund’s Net Asset Value (NAV) represents the value per unit. The NAV is equal to the market worth of assets held in the portfolio of a Fund, minus liabilities, divided by the number of units currently issued to investors.

The net asset value (NAV) represents the net value of an entity and is calculated as the total value of the entity’s assets minus the total value of its liabilities divided by the total number of units issued to the investors.

The offer and redemption price of the units are sometimes different from the published NAV due to the “Sales Load (Front End)” or the “Sales Load (Back End)”.

These daily prices along with the daily NAV are posted every day on the AKDIML website for the investors.

AKDIML offers an online platform for its investors to monitor their investments easily and conveniently. In addition, they can also contact their respective sales persons for additional information that they may require. Furthermore, investors can download the mobile application to view portfolio summary at any given time.

Yes, Zakat will be deducted at the time of redemption or dividend payment unless Zakat Exemption Declaration Form (CZ-50) / Zakat Affidavit is submitted to the company. Except for the unit holders exempted from payment of Zakat in accordance with the provisions of the Zakat and Usher Ordinance 1980, units held by a Muslim resident Pakistani unit holder, who is also Sahib-e-Nisab (persons liable to Zakat) are subject to the deduction of Zakat @ 2.5% of the face value or NAV, whichever is less, as of the Zakat valuation/deduction date.

You can contact our Customer Support Relations team to address your queries timely. UAN: 111-253-465 Email: csr@akdinvestment.com SMS: “Invest” to 9253

You should talk to one of our sales representatives and brief them about your needs as to why you are investing in the mutual funds. He/She will explain and brief you about the different funds that AKDIML has to offer and based on your needs will recommend the best suitable fund, or a combination of different funds which will help you achieve your investment goals.

No, it is not. Unlike investing directly in stocks or shares in the stock market, Mutual funds pool money together from a group of investors and invest that money into different investment avenues and securities such as stocks, bonds, money market instruments, and government securities to name a few. Every fund has a different investment objective, and constraints as to where they can invest the pooled money in, and they operate within the boundaries outlined by their respective offering documents. By investing in a mutual fund, an investor can enjoy various benefits such as diversification, lower costs, and convenience.

A “Prospectus” or an “Offering Document” is a legal document that is required, filed, and approved by the Securities & Exchange Commission of Pakistan (SECP) giving details about an investment offering to the public. The document can help potential investors make more informed investment decisions because it contains an array of relevant information about the investment security or a mutual fund. Every fund has a different investment objective, and constraints as to where they can invest the pooled money in, and they operate within the boundaries outlined by their respective offering documents. A typical prospectus of a mutual fund contains information such as Investment Objectives, Investment Restrictions, Risk Disclosure, Trustee, Board of Directors and Management, Expenses of the Management Company and the Trustee, Financial Reporting, and etc.

Offer Price is the price that an investor pays when he purchases a single unit of a mutual fund and is equivalent to the NAV per unit plus the applicable Sales Load (Front End) load. Redemption Price is the price that an investor gets when he sells his units to the fund and is equivalent to the NAV minus Sales Load (Back End) along with any redemption charges.

Once you have made an investment, you will get a confirmation email and a SMS confirming your investment.

You may contact us by email at csr@akdinvestment.com, or by phone at UAN (021) 111-253-465 and convey your desired need or request to our customer services representative and the requested account statement will be sent to you via mail or email, as per your choice.

Additionally, you can also ask your designated sales person to issue your desired account statement. Usually, an investor has the option to receive their account statements on a monthly basis or every 6 months, whichever suits their needs.

The cut-off time for investment in AKDIML funds is 9:00 am to 5:00 pm from Monday till Friday. Any future change in timings shall be timely communicated to investors via email and SMS.

A Fund Manager Report (FMR) is a report that is prepared on a monthly basis which contains a brief summary about the fund and its performance in a given month. It is placed on the company website for the investors to gauge and track the performance of the funds they have invested their money in. It can also be used by potential investors in deciding where to invest.

Yes, in order to qualify for their tax-exempt status, “any Mutual Fund approved by the [Securities and Exchanges commission of Pakistan] and set up by the Investment Corporation of Pakistan, if not less than ninety per cent of its Certificates at the end of that year are held by the public and not less than ninety per cent of its income of that year is distributed among the Certificate-holder”.

A benchmark, in the case of Mutual Funds, represents an index against which the mutual funds’ performance is measured. Generally, if a fund performs better than its benchmark it is called “outperformance”, and if it has performed worse than its benchmark then it is called “underperformance”. A common benchmark for conventional funds is the KSE-100, or KSE-30, and for Islamic Funds KMI-30.

Investment can only be made in Pak Rupees (PKR).

Dividends from Mutual Funds are withheld at the rate of 15% from investors other than Insurance Companies and Banks. For more information and understanding, please refer to Division III of the First Schedule of the Income Tax Ordinance, 2001.

No, we do not accept third party cheques.