ISLAMABAD: The Securities and Exchange Commi­ssion of Pakistan (SECP) on Friday prescribed the regulatory framework for Fixed Rate Mutual Funds through Circular No 3 of 2022.

The new category will contribute towards expanding investor base, lead to availability of a low-cost investment product with a low risk factor and facilitate growth in the mutual funds industry a press release said.

A fixed-rate mutual fund focuses on investments that typically pay a set and stable rate of return, such as government bonds, money market placements, certificate of deposits etc. It is designed to generate stable returns for passing the investors/unit holder, thus ensuring competitive return on their investments as compared to other fixed-return products.

The fixed-rate mutual fund is particularly important for those investors who prefer to have certainty of returns for their specific periodic needs. This scheme can also effectively serve institutional investors such as provident funds, pension funds, gratuity funds for managing their liquidity.

The regulatory framework specified by the SECP allows flexibility in product design such as investment horizon, offering rates and marketing segment-specific advertisements. The circular of new framework is available at the SECP website.

Published in Dawn, February 12th, 2022