KARACHI, Sept 14: Arif Habib Investments says it has proposed to launch a Shariah-compliant fund, adding that it is the first mutual fund which, once cleared by the regulators, would make overseas investment.

The proposed Pakistan International Element Islamic Fund (PIEIF) is waiting for final approval from the Securities and Exchange Commission of Pakistan (SECP) for its launching, an AHI press release said on Wednesday.

Through a circular issued last month, the State Bank allowed locally established mutual funds to invest abroad. Under the rules laid down by the central bank, mutual funds are allowed to invest abroad a maximum of 30 per cent of the Fund size but up to $15 million or roughly Rs900 million.

The proposed fund of AHI is going to be the third Shariah-compliant fund in Pakistan after Meezan Islamic Fund and UTP Islamic Fund.

However, recognizing that the Shariah compliance may limit the asset universe for mutual funds, especially if the domestic market becomes expensive, AHI has “sought permission to invest overseas”. This is expected to create new opportunities and capability to diversify and improve the risk profile for the fund’s investors.

“Investing abroad will help Pakistani fund managers crate an understanding of overseas markets and perhaps also get opportunities to solicit investment into Pakistani capital markets.”

Arif Habib Investments has been managing conventional open-end and closed-end mutual funds for the last few years.