– Diaspora investments are going to quadruple in the coming years ahead
– For absolute returns, the stock market stands out empirically
Interview with Syed Ali Raza Bukhari — Head of SMAs National Investment Trust Limited
PAGE: Tell me something about yourself and your career please:
Syed Ali Raza Bukhari:Â Prior to joining National Investment Trust Limited as the Head of SMAs in 2018, I have had the opportunity to set up and successfully manage a Pakistan Stock Exchange Member Brokerage firm, bringing it up as a boutique institutional trading platform. I have also been associated with the asset management industry for quite some time now, spreading my 16 years of specialized financial services experience into a diversified landscape of multiple professional domains-like marketing/sales, advisory, distribution, product development, stock brokerage and operations. I have also had the honor to have represented our financial markets on myriad investment forums in Pakistan with a couple in UAE and China, alike.
PAGE: Could you share with us the details about the investment opportunities in the mutual funds?
Syed Ali Raza Bukhari:Â Mutual Funds have ample opportunities of investments for all kinds of risk appetites. Starting off from low risk Money Market Funds to High Risk Equity Funds, one could name it and diversify accordingly. The best part about Mutual Funds is its ability to work professionally and proficiently for its investors whilst them enjoying and concentrating on other important aspects of their lives. To sum it up, I would urge all savers, young or old, new or proficient, to use this vehicle to park their surplus. Use Money Market Funds for short term placements, balanced/asset allocation funds for balancing of risk and rewards and Stock Funds for higher returns and longer tenors and so forth. For further details, contact the relevant AMC and they will be more than pleased to guide on the risk and reward aspects for all investment needs. Besides, one has an open option now to use conventional or Islamic categories offered by various Asset Management Companies in Pakistan.
PAGE: How would you comment on the investment made by the Pakistani diaspora in the financial sector?
Syed Ali Raza Bukhari:Â As a matter of figures and ground reality I think diaspora investments are going to quadruple in the coming years ahead. Currently if we look at the Portfolio Investments alone, overseas Pakistanis have been net buyers of 21Mio USD with 196Mio USD of gross buying since the start of this calendar year. Whereas, the repatriable Roshan Digital Account (RDA) has taken the diaspora by storm in fetching upward of 1,800Mio USD uptill July 2021 in 10 months alone. Even though the RDA may be directing the funds to multiple avenues like NPCs, banking deposits, retail online banking facilities, car loans, charity and so forth. But more of serious avenues like the Capital Markets including debt market and Mutual Funds, are also becoming a part of this diaspora consortium. With more than190k RDA accounts, and more adding up, I foresee the diaspora to become a major part of our financial system in the very near future. This financial inclusion strategy for diaspora has already started bearing fruits of adding depth to our financial markets.
PAGE: Do you presume investment in mutual funds could spike in a couple of years down the line?
Syed Ali Raza Bukhari:Â Absolutely yes! If you look at simple numbers, our Mutual Funds industry stood at Rs. 250Bio in 2011 and in 2020 it stands at Rs. 770Bio. This growth is quite comparable and competitive despite of our boom and bust economic cycles. I optimistically foresee that we should be surpassing the 1 trillion mark in just a couple of years down the road now, as diaspora is also poised to catching up to this investment avenue. I hope and foresee that the stock market may remain robust, because much of our AUMs should come from this high risk asset class alone. Though the Money Market category has outshined all other asset classes by bounds, and shall continue to do so ahead. Besides, as you may notice in the near future, many innovative products are also being introduced that could add more depth to this industry. To talk of the breadth that already comes handy.
PAGE: What is your take on the investment made in the real estate and commodities vis-a-vis mutual funds?
Syed Ali Raza Bukhari:Â If we look at the performance of our Stock Market, it has far outperformed any other asset class in the past decade. Even though real estate has also performed well but when it comes to absolute returns, the stock market stands out empirically. As for the commodities, Gold is the only barometer that we could look into and Gold has always been a great hedge against inflation and currency parities. Now if we club all these asset classes together, I think every asset class has a very significant value in terms of its risk, positioning, need and viability for any investor. One should never have all the eggs in one basket. Yes, agreeably, the stock market has always had very enticing return profiling against very nominal amounts to start with. But then, if one could add an asset class for diversification, real estate should also be there and if further diversification can be made possible, Gold should be there in your basket too, and so forth. The best way to approach the Capital Market is through Mutual Funds, so when I say Stock Market, you may ideally replace it with equity mutual funds, easily available and accessible in our financial market.