Mutual fund assets triple in 3 years as investors move to equities in Pakistan
Domestic inflows help offset foreign selling and underpin record gains in the KSE-100
Haris Zamir
Business Editor
Experience of almost 33 years where started the journey of financial journalism from Business Recorder in 1992. From 2006 onwards attached with Television Media worked at Sun Tv, Dawn Tv, Geo Tv and Dunya Tv. During the period also worked as a stringer for Bloomberg for seven years and Dow Jones for five years. Also wrote articles for several highly acclaimed periodicals like the Newsline, Pakistan Gulf Economist and Money Matters (The News publications)
Assets under management at Pakistan’s mutual funds have tripled over the past three years, underlining a sharp shift by investors toward equities and helping the country’s stock market absorb foreign outflows, industry data shows.
According to figures compiled by the Mutual Funds Association of Pakistan and published by JS Global, total mutual fund assets rose 11% year-on-year in December, driven by fresh investor inflows, capital market gains and a gradual diversion of savings from fixed-income products into equities.
The surge in domestic investment has played a key role in supporting the Pakistan Stock Exchange’s benchmark KSE-100 index, which delivered a cumulative return of about 331% between 2022 and 2025, amid signs of improving macroeconomic stability.
Equity investments within total mutual fund assets climbed 56% in calendar year 2025, while allocations to debt portfolios, including income, fixed-income and money market funds, rose by a comparatively modest 5%, the data showed.
Analysts attribute the shift to a sharp easing in monetary policy and changes in taxation. Since December 2023, the central bank has cut its policy rate by a cumulative 1,150 basis points, while yields on three-year Pakistan Investment Bonds have fallen about 630 basis points. At the same time, higher taxes on fixed-income investments introduced in the latest federal budget have reduced the appeal of debt instruments.
As a result, equities now account for about 15% of total mutual fund assets, up from a low of 10% in December 2023. However, the share remains well below the 40% to 50% levels seen during the 2016-2018 period.
Strong domestic liquidity has also helped counter foreign selling in the equity market. In 2025, mutual funds and individual investors were net buyers of roughly $561 million worth of shares, including $298 million by mutual funds alone, offsetting net foreign portfolio outflows of about $370 million, according to market data.
The trend has continued into early 2026, with foreign outflows of $53 million more than offset by mutual fund inflows of about $92.5 million.
Market valuations have risen alongside improved liquidity, with the KSE-100’s price-to-earnings multiple climbing from around 3.5 times in December 2023 to about 8 times in December.
Analysts say ample domestic liquidity and the growing attractiveness of equities could support further gains if macroeconomic conditions continue to stabilize.
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