What is FundShop?
FundShop is an institution that has the authority to sell/distribute different financial instruments (Mutual Funds, Life Insurance and Bonds) for Investment Management Companies without any direct relation to the instrument.

Why should I Invest through FundShop?
FundShop provide its clients timely information and accurate transaction services by organizing, standardizing and centralizing various investment processes. FundShop provides one window solution to its client by providing a link to invest in vast variety of products offered by different financial institutions.

Is there any Fee charged for investing through FundShop?
FundShop does not charge its client any fee for its services provided. FundShop receives its compensation for the Investment Vehicles the client invests in. 

How is my money transferred when I invest through FundShop?
Your money is directly transferred in the respective Investment vehicle’s Bank Account. FundShop, at any point, doesn’t  collect your money.

Mutual Funds

What is a Mutual Fund?
A mutual fund is a trust. It pools money from like-minded investors and invests the money in a diversified portfolio of securities, through various schemes that address different needs of investors. The securities a mutual fund invests in is based on the investment objective of a particular scheme. Such objective is clearly laid down in the Offering document for that scheme. The fund adds value to the investment in two ways: income earned and any capital appreciation realized through sale. This is shared by unit holders in proportion to the number of units they own.

What is a money market? 
A money market is a financial market where only short-term debt instruments are traded. In the money markets, banks lend to and borrow from each other through short-term financial instruments such as Certificate of Investments (COI) or enter into agreements such as repurchase agreements (repos). 

What is a capital market? 
A capital market is the market in which long-term debt and equity instruments are traded or where companies and governments can raise long-term funds. Capital market includes both the stock markets as well as the bond markets. 

What is the difference between money market and stock market funds? 
The money market funds basically invest in short-term debt instruments, mostly Treasury bills. The return in these funds is less but the advantage of saving your principal is the primary factor. Stock market funds invest in stock markets generating high returns but involving high risk of losing principal as well.

Who takes care of my investment?
Asset Management companies have experienced and efficient fund managers who manage the pool of investment. Fund Manager takes cares of the investment and trading activities in the underlying securities, realizing capital gains or losses, and collects the dividend or interest income.

What is a NAV? 
The Net Asset Value (value of a share of the mutual fund) is calculated daily based on the total value of the fund divided by the number of shares currently issued and outstanding. It changes daily depending on the change in the size of the fund.

What are the different types of mutual fund schemes?
Mutual fund schemes can be classified as follows: 
By Structure Open-ended schemes: An Open-end Fund is one that is available for subscription all through the year. These do not have a fixed maturity. Investors can conveniently buy and sell units of the Funds from the Asset Management Company (AMC) at the related prices commonly known as Net Asset Value ("NAV"). 
Close-ended schemes: A Close-ended Fund is open for subscription only during a specified period. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the Stock Exchanges where they are listed.

What are the benefits of investing in Mutual Funds?
There are many benefits of investing in mutual funds including the following: 

• Professional Management. 
• Better return than conventional investment avenues.
• Diversification.
• Tax Benefit.
• Liquidity.
• One window operation.
• Regular income stream. 

How is investment in an Income Fund different from a Bank Deposit?


 

What is the benefit of listing open end funds? What is Capital Gains Tax?
Under Section 62 of Income Tax Ordinance 2001. 
Tax credits on investment is available on securities listed on stock exchange, listed funds are treated as listed securities and eligible for the credit and section 62 of Income Tax Ordinance 2001. 
Capital Gains Tax (CGT) is a applicable on the profits on investments redeemed within 12 months of original investment at rate of 12.5% and where investment is redeemed after 1 year but within 2 years of original investment CGT rate is 10%, Whereas profit on all investments held for over two year are tax-exempt. The same is applicable on any bonus units issued to mutual funds during the year.

What is the difference between growth units and income units?
The basic difference is in the manner in which investment in the units of a Fund is redeemed (encashed). 
In case of growth unit, the investment remains in the Fund until the investor submits a redemption form to encash part or whole of the investment. 
In case of income unit, the investor opts to withdraw a certain amount at regular intervals. Income unit has two types i.e. Fixed Income Unit and Flexible Income Unit: In case of Fixed Income Unit, the investor specifies a fixed amount to be redeemed and transferred in the investor’s bank account at regular intervals. (In case the amount of redemption exceeds the increase in investment value during each interval, the principal investment invested by the investor may deplete.) 
In case of Flexible Income Unit, the investor authorizes the Management Company to redeem and transfer in the investor’s bank account, an amount equal to the increase in the investment value during each interval?

What is a Benchmark?
A benchmark represents the market in which the Mutual Fund invests money. The performance of the benchmark is considered to be the average performance of all the investors in that market. A Mutual Fund’s performance is compared with the benchmark in order to find out whether the Fund performed better than the market. All actively managed Funds try to perform better than their specified benchmarks.

What is sales load?
Open-end funds recover a sales charge (called sales load) from unit/ share holders. Sales load is a certain fixed percentage of Net Asset Value per Unit. Some mutual funds recover the sales load when investors purchase the units (Front End Load), whereas others do when investors redeem (encash) the units (Back End Load). Mutual funds generally do not charge sales load on reinvestment of dividend. The shorter the period of investment, the greater will be the impact of the sales load. Maximum benefit can be derived from mutual fund investment by regularly investing, reinvesting the dividend and holding the investment for a longer period.

PIBS

Who issues PIB?
Government of Pakistan issued in accordance with Public Debt Act 1944

What is the Minimum Investment amount of PIB?
PIB are issued in multiples of PKR 100,000

What is the Maturity period of PIB?
PIBs are issued at different maturity ranging from 3 years to 20 years

Rate and Duration of Coupon?
Coupons are paid semi-annually on a fixed rate.

What is the Auction Schedule?
The schedule is published quarterly by SBP at the beginning of each quarter

Who is the Custodian of the PIB?
Ultimate Custodian is the State Bnak of Pakistan (SBP), but banks maintain these securities in the Investor Portfolio of Securities (IPS) Accounts on behalf of their customers.

TFC

What is a Term Finance Certificate? 

• A corporate debt instrument issued by companies to generate short and medium-term funds.
• Corporate TFCs offer institutional investors, in particular retirement funds and insurance companies, with a viable high yield alternative to the National Saving Schemes (NSS) and bank deposits.
• TFCs are also an essential complement to risk free, lower yielding government bonds such as PIB.
• TFCs can be issued both as a fixed or floating rate instrument and may have a call or put option.

What is TFC Rating

• A TFC must be rated before issuance.
• The rating reflects, the credit risk of The TFC, i.e. the issuer’s ability and commitment to repay scheduled TFC payments.
• Currently two rating agencies PACRA and JCR-VIS are operating in Pakistan.

What is the Income/Return structure of TFC

• Like bonds, TFCs are structured to provide regular income in the form of coupons.
• Unlike a generic bond, a TFCs principal may gradually be redeemed over the tenor of the instrument.
• TFCs are exempt from Capital gain tax. However, coupons payments are subject to income tax.
   

REITs 

What are REITs?
A real estate investment trust (“REIT”), generally, is a company that owns – and typically operates – income-producing real estate or real estate-related assets.  REITs provide a way for individual investors to earn a share of the income produced through commercial real estate ownership – without actually having to go out and buy commercial real estate.

Where do REITs invest?
Most REITs specialize in a single type of real estate – for example, apartment communities.  There are retail REITs, office REITs, residential REITs, healthcare REITs, and industrial REITs

What distinguishes REITs from other real estate companies?
REIT must acquire and develop its real estate properties primarily to operate them as part of its own investment portfolio, as opposed to reselling those properties after they have been developed.

What are the profit distribution rules for REITs?
At least 90% of the profits of the property rental business must be distributed by way of dividend before the filing date for the company's tax return for that accounting period.