Mutual Fund Performance in Bull and Bear Market: The Case of Pakistani Mutual Fund

Chapter 2 Overview of Mutual Funds in Pakistan 1 History of Mutual Funds Pakistani investors mainly have two open and closed funds available for mutual funds. Closed end mutual funds are traded on the stock exchanges, and each investor can buy and sell these funds directly in the stock market. The price of these funds is based on the stock supply and demand, not the net asset value of the closed mutual fund. In 1962, the Pakistan government established an open mutual fund called the National Investment Unit Trust Fund (NITL), commonly known as NIT.

· Mutual Fund - The principle behind mutual funds is simple. With a one-off one-off investment, you can have dozens, hundreds of assets. Therefore, it is a means to pool investment funds and distribute risks. Mutual funds existed for a while, but the modern era dates back to the early 1970s as mutual funds are an important choice for contemporary investors. Mutual funds became conspicuous during the expanding bull market in 1982-1999 and their handsome revenues convinced more and more Americans to use them as the cornerstone of their retirement plan It was. Mutual funds can be used for equities, bonds, cash equivalents, or blends (so-called "balanced" or "hybrid" funds). Most investment trusts have a unique investment philosophy. In recent years, the unexpected performance of many active mutual funds has become a hot topic, and we will explore it in the next chapter.

Index funds are mutual funds managed passively by fund managers. They are less than traditional mutual funds, but in many cases it has proven to be superior to traditional funds. The index fund follows the stock price index like the Standard & Poor's 500, not letting the fund manager select the shares individually. As these funds reflect the performance of the index, no fund managers are needed. The stock price of a closed-end fund is usually a premium or discount, of course, it is affected by the supply-demand law. However, before buying discount shares, we recommend investigating the fund's past performance to ensure that the value of these shares will rise. Otherwise, you probably bought some stocks of poor funds.

Popular mutual funds are still index funds. Last year, it was estimated that 20% of all funds invested in the US stock market were put into index funds. These mutual funds are linked to the performance of the index such as Dow Jones Industrial Average Price or S & P 500 Index. The index is simply a collection of stocks selected according to a specific gauge. Importantly, the criteria for inclusion of stocks in certain indexes can change over time. For a typical mutual fund there is a portfolio manager that eventually chooses, but the index fund uses the criteria of a particular index. In other words, people behind the index are ultimately responsible for investing in money.