Mutual funds and Islamic funds have huge potential in Pakistan: Saqib Saleem

• Interview with Mr Saqib Saleem, Chief Executive Officer MCB-Arif Habib Savings and Investments Limited

Saqib Saleem has over 13 years of strategic focus within the investment industry and is a prominent fellow member of the Institute of Chartered Accountants of Pakistan. Saleem currently is the CEO of MCB-Arif Habib Savings and Investments Ltd. He has a long standing association the company and has formerly worked in the capacities of Chief Operating Officer and Company Secretary. With his vast experience in the industry, Saleem has served as a member on industry related committees on various occasions. Pakistan Today asked Saleem some challenging questions to understand the changing investment market dynamics. Here are some excerpts from the interview:

Pakistan Today: Having a 15-year saving and investment legacy, how would you explain the market outlook to a new-to-market investor?

Saqib Saleem: A new-to-market investor is a mid to lower income level common Pakistani who wants to save a portion of her/his hard earned money. My first advice to these new individual investors would be to cultivate healthy financial habits and understand the power of patience for sustenance. Make your money work for you by focusing on increasing purchasing power over a period of time and seeking reliable investment advice if they lack expertise to choose a suitable investment product.

For the past 15 years we have professionally managed a pool of money sourced from clients and invested in a wide variety of companies. For this reason, we have 14 types of mutual funds, two voluntary pension schemes and different investments plans in our product portfolio.

PT: MCB Arif Habib Savings and Investments Ltd (MCBAH) is amongst the pioneers for many products in the industry, what has been your unique market penetration strategy?

SS: MCB-Arif Habib Savings is a result of a strategic merger between two leading asset management companies of the country. The merger was finalised back in June 2011 when sponsors of Arif Habib Investments Ltd and MCB Asset Management Company Ltd decided to join hands. The two sponsors are amongst the largest conglomerates in the country and considered to be the finest institutions within their respective industries.

In addition to our investor-centric approach and legacy of innovation, our overall governance structure kept us on the forefront of adopting international best practices. In fact, various practices adopted by us have been implemented as law.

To consciously expand the market, we are aggressively investing in our systems to improve our investor experience while focusing on technology to expand our investor base. We continue to deliberate on developing investment solutions such as MCB Frequent Payout Fund and Gulluck Plan. Going forward, MCB AH would continue to draw strength from more innovative products and technology solutions for its investors.

PT: How do Pakistani consumer habits effect the asset management industry growth and what are your suggestions to the government for sector’s betterment?

SS: The mutual funds industry in Pakistan is still in its infancy stage standing at mere 1.6% of GDP, compared with regional peers such as India, China and Taiwan with a size of 8%, 11.5% and 11.9% of GDP, respectively. An increase in awareness and introduction of innovative products in the industry to reach out to general public will provide an impetus to growth.

Having said that we also have conscious appreciation of the recent low risk customer regulatory framework introduced by the Securities and Exchange Commission of Pakistan, MCB-AH sees a lot of potential in this area. Given the recent advancements in financial technology, we believe that Mutual Fund Industry can also play a productive role in National Financial Inclusion drive. But the government needs to devise public awareness campaign for savings in general.

PT: What future do you foresee for Shariah Compliant financial solutions in Pakistan?

SS: Islamic finance industry has expanded rapidly over the past decade, growing at 10-12% annually. The total assets under management in the global Islamic finance industry now nearly amount to USD ~2 trillion, with the potential, according to Standard & Poor’s, to rise to USD 5 trillion by 2020.

Pakistan has seen significant development in this sector during the last five years. The Islamic fund’s net assets have grown at an astounding CAGR of 41% (PKR 130 billion in 2015 vs PKR 23 billion in 2010). This phenomenal growth replicates the demand and performance of these assets.

Considering our economy is entering the growth phase with CPEC and other infrastructure projects spearheading the development, we expect young investors to enter the market increase their investment profile. We call it “real and physical” economy, making it an ideal time for investing in Islamic funds as they are most likely to benefit from such growth.