# Mutual funds in Pakistan: types, returns and halal options

URL: https://which.pk/money/guides/mutual-funds-pakistan/
Author: Ahtisham Imtiaz
Updated: 8 Oct 2026

## Summary

Pakistan's mutual funds held Rs 4.66 trillion in August 2026, and Shariah-compliant funds made up about 49% of open-end fund assets, per MUFAP. Money market funds returned 10.53% a year that month and equity funds 0.80% for the month. Over the year to August, equity funds ranged from 4.70% to 45.42%. Fund documents label money market funds low risk and equity funds high. Management fees are capped from 1.25% to 3% a year. Individuals have 15% tax deducted on redemption gains.

## Key facts

- Industry size: Rs 4.66 trillion (Aug 2026)
- Shariah share: 49% of open-end funds
- Max sales load: 3%
- Tax on gains: 15% (individuals)

A mutual fund pools many people's money and a licensed asset management company (AMC) invests it in bank deposits, government debt, bonds or shares. In Pakistan these funds held **Rs 4.66 trillion in August 2026**, per MUFAP (Mutual Funds Association of Pakistan). **About 49%** of open-end fund assets were Shariah-compliant. Returns are not fixed: money market funds earned **10.53% a year** that month, while equity funds returned **0.80%** for the month.

**Where the money sat, August 2026:** Rs 2.03 trillion in money market funds (Out of Rs 4.49 trillion in open-end funds. Income funds Rs 995 billion, equity funds Rs 613 billion (MUFAP))

## What types of mutual funds are there in Pakistan?

Most types come in a conventional and a Shariah-compliant version. Each fund's documents state its risk level, given as how much your **principal** (the money you put in) is at risk. The labels below are the ones one large AMC shows on its fund pages; check the label on the fund you're considering.

| Type | What it holds | Risk label on fund documents | Return in Aug 2026 (MUFAP) |
|---|---|---|---|
| Money market | Short-term debt and deposits | Low | 10.53% a year (annualised) |
| Income | Debt securities | Medium | 10.18% a year (annualised) |
| Fixed rate / return | Debt held for a set term | (varies by plan) | 8.62% a year (annualised) |
| Equity | Listed shares | High | 0.80% for the month |
| Balanced / asset allocation | Shares and debt | High | 0.82% / 0.42% for the month |
| Shariah money market | Shariah-compliant short-term instruments | (check fund) | 10.24% a year (annualised) |
| Shariah equity | Shariah-compliant shares | (check fund) | 2.34% for the month |
| VPS (pension) | Sub-funds of debt, money market, shares | (by sub-fund) | money market sub-fund 10.24% a year |

These are **past returns for one month**. MUFAP says its annualised returns for debt funds and one-month returns for equity funds aren't comparable. Its category returns are averages weighted by fund size, after fund expenses but before any sales load.

**Why we don't name the 'best' funds:** Searches for the "best mutual funds in Pakistan 2026" usually lead to last year's top performer. In MUFAP's ranking for the 365 days to 31 August 2026, the 23 conventional equity funds returned anywhere from 4.70% to 45.42%. We show categories and sources, not picks.

## How do I invest in a mutual fund?

MUFAP's August 2026 newsletter lists **25 member companies** managing funds, mostly AMCs plus a few life insurers. It counted **812,693 digital accounts** holding Rs 172 billion that month, so opening online is common. Overseas Pakistanis can invest through a Roshan Digital Account: MUFAP counted 18,994 such accounts. See [investing through a Roshan Digital Account](/money/guides/roshan-digital-account-investment/).

## Are mutual funds in Pakistan halal or haram?

That is a religious judgement we can't make for you. What we can say: Pakistan has a full set of **Shariah-compliant** categories (money market, income, equity, fixed return, pension). They held **Rs 2.2 trillion** in August 2026 against Rs 2.29 trillion in conventional open-end funds. SECP's 2025 rule changes also tightened the Shariah compliance framework for these funds.

## What fees do mutual funds charge?

Since **1 July 2025**, SECP caps the yearly **management fee**, charged on the fund's average net assets:

| Fund type | Fee cap a year |
|---|---|
| Equity | 3.00% |
| Income, aggressive income, commodities | 1.50% |
| Money market | 1.25% |
| Fixed rate / return | 1.00% |
| ETFs and index funds | 0.75% |
| Pension equity sub-fund | 2.50% |

A **sales load** (a fee taken when you buy or sell units) can be charged if the fund's offering document allows it. Since October 2022 it's capped at **3%** if you invest directly or through a third-party website, and **1.5%** through the AMC's own website. The AMC must tell you the load before you invest and send a breakup within 48 hours.

## How much tax do I pay on mutual fund returns?

Rates as amended up to 30 June 2026:

| | On the Active Taxpayers List | Not on the list |
|---|---|---|
| Capital gains on redemption (individuals) | 15% | 15% |
| Dividend, part earned from shares | 15% | 30% |
| Dividend, part earned from debt | 25% | 50% |
| Dividend from a fund earning half or more from debt | 25% | 50% |

The redemption rule in the Ordinance sets one 15% rate for all individuals; it has no separate rate for non-filers. No capital gains tax is deducted on units bought on or before 30 June 2024 and held more than six years.

**Pension funds (VPS)** work differently: salaried and business individuals get a tax credit on contributions of up to **20% of taxable income** under section 63. The old tax credit for buying shares or fund units (section 62) was removed in 2022.

## Which fund suits whom?

- **Money you need within a year:** money market funds are labelled low risk and earned 10.53% a year in August 2026. Compare with bank deposits, where profit is taxed at 20% for filers.
- **Money for five years or more:** equity funds carry high risk. In February 2026 they lost 9.78% in a single month.
- **Retirement saving with a tax credit:** VPS pension funds.

To buy shares yourself instead, see [how to invest in PSX](/money/guides/how-to-invest-in-psx/). For the tax rates above you need to be a filer: see [filer vs non-filer](/business/guides/filer-vs-non-filer/).

More guides: [investment options in Pakistan](/money/guides/investment-options-pakistan/), [national savings certificates](/money/guides/national-savings-certificates/), [Investing](/money/investing/).

## Questions people ask

### Are mutual funds in Pakistan halal?

Pakistan has separate Shariah-compliant funds in every main category. In August 2026 they held Rs 2.2 trillion, about 49% of open-end fund assets, according to MUFAP.

### What is the profit rate of mutual funds in Pakistan?

There is no fixed rate. In August 2026, MUFAP reported money market funds at 10.53% a year (annualised) and equity funds at 0.80% for the month. Past returns don't predict future ones.

### How much tax is charged on mutual fund profit?

The fund deducts 15% capital gains tax from individuals when they redeem. Filers pay 15% on the equity part of a dividend and 25% on the debt part; non-filers pay double on dividends.

### What fees do mutual funds charge?

A management fee capped by SECP from 1.25% a year for money market funds to 3% for equity funds, plus a sales load of up to 3% where the fund's documents allow it.

## Sources

- [MUFAP E-Newsletter, August 2026](https://mufap.com.pk/Upload/WebDoc/Communication/MUFAP_Newsletter_-_Aug_202625480.pdf), MUFAP (accessed 8 Oct 2026)
- [Ranking of CIS on the basis of their last 365 days returns, August 2026](https://www.mufap.com.pk/Upload/WebDoc/IndustryStatictics/Ranking_of_CIS_-_Aug_202625473.pdf), MUFAP (accessed 8 Oct 2026)
- [MUFAP Newsletter, February 2026](https://mufap.com.pk/Upload/WebDoc/Communication/MUFAP_Newsletter_-_Feb_202624806.pdf), MUFAP (accessed 8 Oct 2026)
- [Withholding Income Tax Rate Card (Finance Act 2026)](https://download1.fbr.gov.pk/Docs/202681113864992WithholdingTaxRatesCard2027.pdf), FBR (accessed 8 Oct 2026)
- [Income Tax Ordinance, 2001 (amended up to 30 June 2026)](https://download1.fbr.gov.pk/Docs/2026724177725705IncomeTaxOrdinanace2001.pdf), FBR (accessed 8 Oct 2026)
- [AMCs, PFMs: SECP replaces TER capping regime with caps on management fees wef July 1](https://www.brecorder.com/news/40357852/amcs-pfms-secp-replaces-ter-capping-regime-with-caps-on-management-fees-wef-july-1), Business Recorder (accessed 8 Oct 2026)
- [SECP directs AMCs to keep sales load below 3% of NAV per unit](https://propakistani.pk/2022/10/13/secp-directs-asset-management-companies-to-keep-sales-load-below-3-of-nav-per-unit/), ProPakistani (accessed 8 Oct 2026)
- [SECP to introduce new cost reforms in mutual funds from July 2025](https://profit.pakistantoday.com.pk/2025/02/07/secp-to-introduce-new-cost-reforms-in-mutual-funds-from-july-2025), Profit (accessed 8 Oct 2026)
- [Pakistan Cash Management Fund (risk profile)](https://www.mcbfunds.com/mfunds/pakistan-cash-management-fund/), MCB Investment Management (accessed 8 Oct 2026)
- [MCB DCF Income Fund (risk profile)](https://www.mcbfunds.com/mfunds/mcb-dcf-income-fund/), MCB Investment Management (accessed 8 Oct 2026)
- [MCB Pakistan Stock Market Fund (risk profile)](https://www.mcbfunds.com/mfunds/mcb-pakistan-stock-market-fund/), MCB Investment Management (accessed 8 Oct 2026)