ISLAMABAD, Aug 7: The total market capitalization of the mutual funds sector shot up to Rs26 billion during the fiscal 2001-02, denoting an increase of Rs2 billion in a single year, the Securities and Exchange Commission of Pakistan stated here on Wednesday.

Attributing the development to the initiatives taken by the Commission to enhance the depth and institutional investments in the country, the source said it was currently engaged in processing more applications seeking permission to float new mutual funds and asset management companies.

During the past year, the Specialized Companies Division of SECP had processed four new applications for flotation of mutual funds while another two are in the pipeline.

Giving details, the source said Arif Habib Investments was given permission to float two new funds — Pakistan Income Fund (PIF) and Pakistan Stock Fund (PSF) — with nine administrative schemes.

The SECP had also approved the application by ABAMCO to float a second open-end fund after it had demonstrated a good track record with their first fund — Unit Trust of Pakistan (UTP). A new company by the name of “United Asset Management Company” (UAMC) has been given the permission to float a money market fund.

The SECP, the source recalled, had been actively involved in promoting the mutual fund sector and creating an environment conducive to investment through collective investment schemes. For example, it allowed provident funds to invest up to 50 per cent of their funds in the mutual fund sector.

The SECP has been trying to obtain tax exemptions for mutual funds and their investors, while also amending the relevant rules and regulations to keep up with the needs of the industry.

In an effort to maintain some minimum standards for the industry, the SECP has adhered to strict eligibility criteria for entry into the sector. The credentials of sponsors of the schemes are scrutinized in detail and the background, qualifications and expertise of personnel assessed to ensure that qualified professionals are entrusted with the task of managing the pooled savings of individual investors.

The Commission emphasises the foreign technical partnership with an international asset management company for those wishing to float an equity market fund. Besides, they are advised to obtain an on-going technical collaboration with foreign fund managers with a view to facilitating the transfer of technical knowledge and know-how from experienced professionals from around the world.

Accordingly, the source observed, all the open-end mutual funds operating in the private sector, namely UTP, PIF and PSM, have been set up with international technical collaboration.