Building up your savings is no small feat. It takes discipline, patience, and hard work. Once you’ve got that nest egg, the next challenge is figuring out how to make it grow. Sure, you could dive into stocks, bonds, or gold, but that means constant research, decision-making, and market watching. For many people, that’s simply not practical. Mutual funds offer a different path: they pool your money with other investors and leave the day-to-day decisions to professionals, so your money works for you while you focus on everything else in life.
A mutual fund is, at its core, a pooled investment vehicle. It pools money from many investors like you, and a professional fund manager invests this pool into a diversified mix of assets; stocks, bonds, money market instruments, or a combination of them. The aim is simple: let you benefit from professional expertise, diversification, and liquidity without having to make every buy-and-sell decision yourself.
Discover the best option for yourself: “Stocks vs Mutual Funds vs ETFs”
How They Work
In Pakistan, mutual funds operate under two main structures:
Open-Ended Funds
These give you the freedom to invest or cash out whenever you like. Unit prices are tied to the Net Asset Value (NAV), updated daily by the Asset Management Company (AMC). This makes them a go-to choice for investors who value quick, hassle-free access to their money.
Closed-Ended Funds
These launches with a fixed number of units, sold through an IPO. Afterward, they trade on the Pakistan Stock Exchange (PSX) just like company shares. Prices move with market demand and supply, meaning they can sell for more or less than their NAV.
Your choice comes down to priorities: flexibility and daily liquidity, or a stock-like investment that could offer price opportunities.
Types of Mutual Funds – Finding Your Match
Mutual funds each have their own “personality.” Some are adventurous risk-takers, others are steady and cautious, while a few aim for a middle ground. The best fit is the one that matches your goals, risk appetite, and investment horizon.
1. Equity Funds – The Growth Seekers
If you’re aiming for long-term capital growth and can handle the market’s ups and downs, equity funds could be the right fit for you. They invest primarily in shares of listed companies on PSX, aiming to outperform the market.
- Risk: High
- Potential Return: High, especially over longer periods.
- Example: NBP Stock Fund invests in a diversified portfolio of Pakistani equities.
- Shariah Option: Al Meezan Mutual Fund for those seeking Islamic compliance.
Equity Fund Performance – Growth vs. Risk: What Investors Need to Know
| Asset Manager | Fund Name | NAV | FY2025 | FY2024 | FY2023 | FY2022 | FY2021 | Average 5 year | 5Y CAGR | SD |
| NBP Funds | NBP Stock Fund | 37.55 | 67.40% | 85.10% | -2.20% | 14.00% | 35.90% | 34.44% | 28.42% | 38.32% |
| NBP Financial Sector Fund | 19.64 | 61.80% | 139.3% | -5.20% | -7.60% | 20.60% | 41.78% | 32.53% | 54.78% | |
| Meezan Funds | Al Meezan Mutual Fund | 43.84 | 64.70% | 74.84% | -0.28% | -10.9% | 32.51% | 32.17% | 27.62% | 34.02% |
| Meezan Islamic Fund | 142.82 | 59.22% | 73.00% | -2.54% | -11.3% | 35.50% | 30.782% | 26.38% | 33.14% | |
| UBL Funds | UBL Stock Advantage Fund | 235.22 | 72.20% | 91.60% | -0.40% | -11.5% | 31.70% | 36.72% | 30.82% | 40% |
| UBL Financial Sector Fund | 286.17 | 71.20% | 143.5% | 1.80% | -4.10% | 20.70% | 46.62% | 37.52% | 55.21% | |
| HBL | HBL Stock | 170.45 | 36.7% | 85.59% | -3.15% | -35.8% | 29.83% | 22.6% | 12.47% | 49.02% |
Over the last five years, UBL Financial Sector Fund has topped performance charts with a remarkable CAGR of 37.52%, trailed by NBP Financial Sector Fund at 32.53% and UBL Stock Advantage Fund at 30.82%. Such gains, however, come at a cost — UBL Financial Sector Fund’s high volatility (SD: 55.21%) signals significant price swings. For those preferring a steadier ride, Meezan Islamic Fund’s lower volatility (SD: 33.14%) offers more stability while delivering competitive returns. Aggressive, risk-tolerant investors may find the high-CAGR options appealing, whereas balanced-growth seekers might lean toward Meezan Islamic Fund or Al Meezan Mutual Fund. Beginners could start small, diversify across multiple funds, and invest gradually to smooth out the effects of market ups and downs.
2. Income Funds – The Steady Earners
For investors who want regular income with moderate risk, income funds focus on fixed-income securities such as government bonds, corporate debt, and Sukuks.
- Risk: Medium
- Potential Return: Stable, generally higher than bank savings rates but lower than equities.
- Example: NBP Islamic Income Fund provides returns through a Shariah-compliant debt portfolio.
Income Fund Performance Overview
| Asset Manager | Fund Name | NAV | FY2025 | FY2024 | FY2023 | FY2022 | FY2021 | Average 5 year | 5Y CAGR | SD |
| NBP Funds | NBP Income Opportunity Fund | 11.2668 | 18.10% | 21.40% | 15.90% | 9.90% | 7.80% | 14.62% | 14.55% | 5.67% |
| NBP Financial Sector Income Fund | 10.7881 | 15.00% | 23.00% | 18.40% | 10.70% | 7.80% | 14.98% | 14.90% | 6.04% | |
| Meezan Funds | Meezan Islamic Income Fund | 52.2657 | 12.54% | 20.94% | 14.86% | 8.63% | 6.64% | 12.722% | 12.65% | 5.61% |
| Meezan Daily Income Fund MDIP-I | 50 | 13.38% | 21.78% | 16.86% | 10.58% | – | 15.65% | 15.13% (4years) | 4.83% | |
| UBL Funds | UBL Income Opportunity Fund | 112.267 | 16.80% | 21.80% | 16.10% | 9.20% | 6.40% | 14.06% | 13.97% | 6.20% |
| UBL Government Securities Fund | 107.852 | 19.20% | 21.10% | 15.40% | 9.10% | 5.60% | 14.08% | 13.99% | 6.60% | |
| HBL | HBL Income | 113.28 | 13.38% | 22.35% | 17.03% | 11.43% | 7.10% | 14.26% | 14.02% | 5.62% |
Income funds, unlike the high-risk, high-reward nature of equity funds, offer steady growth and capital preservation. NBP’s Income Opportunity Fund posted a 5-year CAGR of 14.55% with low volatility (SD: 5.67%), while the Financial Sector Income Fund achieved a slightly higher 14.90% CAGR at 6.04% SD. Among Shariah-compliant options, Meezan’s Islamic Income Fund maintained a 12.65% CAGR with 5.61% SD, and the Daily Income Fund stood out with a 15.13% CAGR over four years and just 4.83% SD. UBL’s Income Opportunity Fund delivered 13.97% CAGR, while its Government Securities Fund matched returns at 13.99% but had the highest volatility (6.60% SD).
3. Money Market Funds – The Safe Harbor
If you prioritize safety and liquidity over high returns, money market funds invest in short-term instruments like Treasury Bills and high-rated bank deposits.
- Risk: Low
- Potential Return: Modest, but often better than a current account.
- Example: HBL Islamic Money Market Fund offers quick accessibility and capital preservation.
Money Market Funds – Liquidity with Low Volatility
| Asset Manager | Fund Name | NAV Current | FY 2025 | FY 2024 | FY 2023 | FY 2022 | FY 2021 | Average 5 year | 5Y CAGR | SD |
| NBP Funds | NBP Money Market Fund | 11.271 | 14.90% | 22.30% | 17.70% | 11.40% | 6.70% | 14.6% | 14.47% | 5.95% |
| NBP Govt. Securities Liquid Fund | 10.4175 | 14.90% | 22.50% | 17.80% | 11.50% | 6.40% | 14.62% | 14.50% | 6.12% | |
| Meezan Funds | Meezan Cash Fund | 51.9166 | 13.34% | 21.22% | 16.11% | 9.00% | 5.81% | 13.1% | 12.96% | 6.02% |
| Meezan Rozana Amdani Fund | 50 | 13.62% | 21.50% | 16.83% | 9.95% | 6.61% | 13.70% | 13.58% | 5.81% | |
| UBL Funds | UBL Money Market Fund | 102.205 | 14.70% | 22.00% | 16.40% | 9.40% | 6.30% | 13.76% | 13.60% | 6.13% |
| UBL Cash Fund | 101.406 | 72.20% | 91.60% | -0.40% | -11.50% | 31.70% | 36.72% | 30.78% | 44.72% | |
| HBL | HBL MMF | 103.62 | 14.05% | 21.54% | 16.66% | 10.26% | 6.84% | 13.87% | 13.76% | 5.08% |
| HBL Cash fund | 103.35 | 14.61% | 22.20% | 17.56% | 10.97% | 6.97% | 14.46% | 14.34% | 5.25% |
Money market funds aim to safeguard capital while delivering steady returns and high liquidity, making them ideal for short-term cash parking or low-risk portfolio anchors. In FY 2025, most posted strong double-digit returns, with 5-year CAGRs near 13–14% and low volatility (~6%). NBP Money Market Fund and UBL Money Market Fund stood out for consistent yields and stability, suiting conservative investors. UBL Cash Fund was an outlier, soaring 72.20% in FY 2025 with a 30.78% CAGR but extreme volatility (SD: 44.72%), appealing only to those willing to take big risks for potentially outsized gains.
4. Balanced (Hybrid) Funds – The Middle Ground
Balanced funds blend equities and fixed income in a set proportion, aiming to balance growth and income. These are for investors who want equity exposure but with a cushion against volatility.
- Risk: Medium to Medium-High (depending on the equity portion)
- Example: Meezan Balanced Fund allocates across stocks and Sukuks to balance risk and reward.
Balanced Funds: Blending Growth with Stability
| Asset Manager | Fund Name | NAV | FY 2025 | FY 2024 | FY 2023 | FY 2022 | FY 2021 | Average 5 year | 5Y CAGR | SD |
| NBP Funds | NBP Balanced Fund | 37.3932 | 49.20% | 52.30% | 2.60% | -6.30% | 19.30% | 23.42 | 21.12% | 26.61% |
| Meezan Funds | Meezan Balanced Fund | 25.1483 | 36.60% | 43.38% | 4.87% | -3.61% | 18.13% | 19.874 | 18.45% | 20.07% |
| HBL Funds | HBL Multi Asset Fund | 198.985 | 40.59% | 62.74% | 4.05% | -17.52% | 21.99% | 22.37 | 19.15% | 31.18% |
Balanced funds blend stock market growth with the steadiness of fixed income, catering to moderate-risk investors. The NBP Balanced Fund delivered 49.20% in FY 2025 and 52.30% in FY 2024, with a 5-year CAGR of 21.12% and higher volatility (SD: 26.61%), suiting those comfortable with market swings. The Meezan Balanced Fund returned 36.60% in FY 2025, offering an 18.45% 5-year CAGR and lower volatility (SD: 20.07%) for stability-focused investors. The HBL Multi Asset Fund posted 40.59% in FY 2025 after 62.74% in FY 2024, with a 19.15% CAGR and highest volatility (SD: 31.18%), appealing to high-risk investors.
5. Index Funds – Following the Market
Rather than seeking to outperform the market, index funds strive to mirror it by tracking a benchmark index like the KSE-100. This passive approach often means lower management fees.
- Risk: Mirrors the index—medium to high depending on market conditions.
- Example: KSE Meezan Index Fund is a Shariah-compliant passive fund tracking the KMI-30 Index’s performance.
Index fund performance overview
| Asset Manager | Fund Name | NAV | FY 2025 | FY 2024 | FY 2023 | FY 2022 | FY 2021 | Average 5 year | 5Y CAGR | SD |
| Meezan Funds | KSE Meezan Index Fund | 156.947 | 43.52% | 75.02% | 0.69% | -10.69% | 36.43% | 28.994 | 25.33% | 34.50% |
The KSE Meezan Index Fund offers strong Shariah-compliant equity growth, with a 5-year CAGR of 25.33% and standout gains of 43.52% in FY 2025 and 75.02% in FY 2024. However, high volatility (SD: 34.50%) means it suits long-term, risk-tolerant investors able to endure sharp market swings.
Conclusion: Turning Savings into a Strategy
In Pakistan’s diverse investment landscape, mutual funds stand out as a practical bridge between ambition and caution. They cater to every kind of investor — from those seeking aggressive equity-driven growth to others prioritizing steady, low-risk income. The performance figures reveal a simple truth: higher returns often come with sharper swings, while stability trades some growth for peace of mind. By aligning your goals, time horizon, and tolerance for risk with the right fund type, you turn passive savings into an active strategy.
With professional managers handling the complexities, you gain not only diversification and liquidity but also the freedom to focus on your life, knowing your money is working in the background. In the end, successful investing isn’t about chasing the highest number — it’s about choosing the path you can walk with confidence.
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“I appreciate the detailed explanation, very helpful!”