Collective Investment Schemes: SECP sets standardised performance benchmarks

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has issued Direction to set standardised performance benchmarks for Asset Management Companies offering Collective Investment Schemes (CIS).

This initiative aims to ensure greater transparency, consistency, and comparability in the performance disclosures of CIS across the asset management industry.

The new benchmarks, categorised for both Conventional and Shariah-Compliant Schemes, will enhance the ability of investors to make more informed decisions by aligning performance metrics with specific investment strategies.

SECP issues master circular for AMCs, IAs

The Mutual Funds Association of Pakistan (MUFAP) will be responsible for calculating and disseminating these benchmarks and peer group average returns for various categories on a monthly basis.

SECP has mandated Asset Management Companies (AMCs) to adopt these benchmarks within one month and update offering documents and Fund Manager Reports accordingly. This move reflects SECP’s commitment to fostering transparency, enhancing investor confidence, and aligning the domestic mutual fund industry with global best practices.

The Mutual Funds Association of Pakistan (MUFAP) shall monitor performance disclosures of the respective CIS and ensure effective compliance with the same.

The MUFAP shall announce 1-month, 3-months, 6-months, 9-months and 1-year PKISRV rates (yields) on daily basis. Yield may be shared directly or through interpolating from the nearest available tenors based upon the method as prescribed and disseminated by MUFAP.

For the purposes of ascertaining benchmark returns of Conventional and Shariah Compliant Fund of Funds CIS, placement in cash and/or near cash instruments shall be considered as investment in Money Market CIS.

For the purposes of calculating highest rates on savings account in a category, highest available rates among that category shall be used by the MUFAP.

MUFAP shall publish all the category wise benchmarks on monthly basis and use monthly weighted average rates to bring consistency.

MUFAP shall publish on its website, ranking of CIS on the basis of their last 365 days returns, on monthly basis. The AMCs shall ensure to include in its monthly Fund Manager’s Report both the old and new benchmarks in parallel for a period of 3 months from the first use of new benchmarks, after which it shall only disclose benchmarks prescribed under this Direction.

All AMCs shall make necessary amendments in the offering document and FMR of the CIS within one month from the issuance of this Direction, the SECP added.

Copyright Business Recorder, 2024