ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has allowed various categories of mutual funds to invest in Exchange Traded Funds (ETFs) in line with the objective of creating a competitive and deep ETFs market, a statement said on Thursday.
These mutual funds have been allowed to invest up to 10 percent of their assets in equity ETFs, income ETFs and money market ETFs.
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Earlier, the SECP had allowed equity oriented mutual funds to invest in Equity ETFs only. Like equity ETFs, income ETFs and money market ETFs are also passively managed and trade on a securities exchange.
Income ETFs allow ordinary investors to gain diversified and passive exposure to fixed income securities such as corporate bonds or government treasury in an inexpensive manner, while money market ETFs are similar to income ETFs albeit with higher portfolio credit rating requirements and shorter maturity of holdings.
