Founder & CEO, Fundshop Investments

Lady with Acumen

Profile:

Rabia set up FundShop, the first Wealth Management Firm in Pakistan, in 2008 after well rounded experience in Corporate Banking, Investment Banking and Asset Management in Pakistan and the UAE. She earned a Master of Business Administration degree from Lahore University of Management Sciences (LUMS) in 2001 following which she worked with Union Bank Limited, Arab Emirates Investment Bank, Dubai, and UBL Fund Managers. She is a CFA charter holder and has obtained the Certified Mutual Funds Distributor, Certified Stock Broker and Pakistan Markets & Regulations certifications from Institute of Capital Markets. She taught as visiting faculty at Beaconhouse School System for 7 years and has been speaking at various technical training and mentorship sessions at LUMS, ICMAP and for ICM.

Blurb:

AMCs in Pakistan need to focus on the technological developments taking place in the global wealth management and financial services industry. In Pakistan, branchless banking has taken off in an exponential manner and the AMCs need to tap this trend and others like online unit issuance and redemption in a mobile friendly platform. 

EVOLVE: Please share a brief profile of FUNDSHOP Investment Management, its achievements and future plans?

RABIA FIDA: FUNDSHOP was set up in 2008 to provide end to end Wealth Management Solutions to investors through a one – window platform. Our vision is to provide a thoughtful and customized solution to all of our clients’ investment needs including cash management, IPS based portfolio management, provident fund management, individual pension planning, education funds, IPOs, commodities, equities and marketable government securities, life insurance and offshore investment vehicles.

FUNDSHOP currently has Rs.7.5 billion parked in various investment products and collective investment schemes; we are working with top tier clients including large local corporates, employee benefit funds and high net worth individuals. In future, we remain committed to our values of measured growth, methodical portfolio management, unparalleled service standards, and robust technology based systems. We are also in talks with a European wealth management outfit which aims to launch its robo - advisor platform in Pakistan through our firm.

EVOLVE: What do you mean when you say that “Asset Management is Life Management”?

RABIA FIDA: Asset Management is life management in the sense that successful investors have to be methodical and serious in their wealth management process and inculcate a lifelong habit of savings. The idea is not hoarding of wealth but in fact optimizing the income and expenses of a family unit. The phases where income exceeds expenses should be leveraged for those when expenses outstrip income. Also, when objectives based portfolio planning is done, it encourages people to carefully consider their future goals and objectives and plan the different stages of their lives according to those timelines.

EVOLVE: How did you find 2015 and what are the greatest challenges being faced by the Asset Management Companies on the whole in Pakistan?

RABIA FIDA: 2015 was a tough year for the Asset Management Industry as it saw a lot of attrition from its flagship product, the fixed income funds. Two key reasons for this were the increase in the CGT rates for Corporate & Institutional investors of mutual funds and the decades low money market yields due to a loose monetary policy being pursued by the SBP. The year was not wildly successful for the equity based funds either due to a lackluster performance by the stock market, which took a breather after three years of solid gains of 183% cumulatively.

The greatest challenge on the face of things seems to be the failure of the industry to grow beyond the Rs.500 billion mark. However, I see this as a symptom of a deeper issue which is a lack of trust by the investing public. Unless and until the asset management companies can be viewed as credible and trustworthy, investors will not divert their savings towards them in any significant way, keeping the larger ones challenged for growth and the smaller ones for survival.

EVOLVE: While comparing Pakistani Asset Management Companies to other countries what are the most important global challenges you perceive?

RABIA FIDA: Globally, AMCs have effectively been able to tap institutional and sophisticated investors such as university endowments, pension funds, and ultra-high net worth investors. There is also a lot of diversity in mutual funds and collective investment schemes whereby investors have a wide array of products to pick and choose from if they wish to diversify according to sector, region, asset class, etc. However, this explosion of products has allowed space for gross negligence by some fund managers and outright fraud by others like Bernie Madoff since individual investors rarely understand the nature of the products they are investing in. This has not been the case in Pakistan as there are fewer and simpler products, strict compliance and regulation by the SECP and MUFAP and generally a more ethical framework followed by the Asset Management Companies. Those which have failed have done so due to lack of scale and even in those cases some recourse has been successfully chartered for their clients.  

EVOLVE: What is the real potential of Mutual Fund for conventional investment in Pakistan? Do you think that there are certain geographic areas or sectors as easier targets for Asset Management Companies in Pakistan? 

RABIA FIDA: The potential, as yet untapped, for mutual funds is phenomenal in Pakistan as people are generally very enthusiastic about speculative avenues and real estate. If this enthusiasm can be harnessed and tempered through education and awareness and brought towards the financial instruments and capital markets, then mutual funds will also gain from this immensely. It all boils down to basic sales training and customer education so that the merits of investing in liquid, structured and regulated financial instruments can be disseminated comprehensively.

EVOLVE: What is the competitive landscape? How important is ‘Continuous Innovation’ in market regarding Asset Management Companies?

RABIA FIDA: Continuous Innovation and new product development are critical to keep the interest of investors and allow the market to evolve according to client needs. More variety in fund selection should be available so that portfolios may be adequately customized, and a leaf from the book of fund managers in more developed markets should be taken in so far as introduction of products like REITs, Multi asset funds, sectoral funds, ETFs and structured products are concerned. 

EVOLVE: Are you satisfied with marketing strategies opted by Pakistani Asset Management Companies? Do you think that they are successfully creating awareness about mutual funds?

RABIA FIDA: I believe that the AMCs are attempting to create awareness about their own individual funds because they feel that that would result in more return on their marketing budgets. However, the AMCs tend to depict short term thinking at times. Unless and until mutual funds as an asset class is not sold to the public, the growth of each individual AMC will remain stunted. A case in point is NIT; why is it that no AMC can overtake it? The reason is that people trust the brand name NIT and compare it to the NSS; if in fact it was perceived by investors as a mutual fund, it might be adversely affected by that representation. This identity crisis is an interesting situation as a marketing case study but a sad truth for the AMC industry.

EVOLVE: In your view what macro factors, Asset Management Companies must be kept in focus while making strategy for coming years?

RABIA FIDA: AMCs in Pakistan need to focus on the technological developments taking place in the global wealth management and financial services industry. In Pakistan, branchless banking has taken off in an exponential manner and the AMCs need to tap this trend and others like online unit issuance and redemption in a mobile friendly platform. 

EVOLVE: Where do you see the asset management sector in Pakistan within next five years?

RABIA FIDA: There have been some important regulatory developments with reference to the robustness of the stress testing methods for mutual funds. The distributor function has also been brought under the ambit of the SECP which will be responsible for licensing of the third parties engaged in mutual funds distribution. The SECP has also rolled out other initiatives related to investor awareness, protection and facilitation such as the opening of Capital Market hubs in different locations where they have set up ‘FundShops’. One also notices greater above the line advertising by AMCs in electronic and print media nowadays. These activities point towards a greater focus on the investors and should pay dividends in the years to come. I see the AMC industry growing two to threefold over the coming few years.

EVOLVE: What are the main themes investors should pay attention to as we head into 2016?

RABIA FIDA: The overriding investment story going forward will revolve around commodities; I see a lot of value in safe haven commodities such as art, precious metals and gems globally. Gold has already rallied by over 17% in absolute terms since the start of 2016. However, as we all know, crude oil volatility is overshadowing all other commodities especially since it is an indicator of world economic health. When the recovery in oil does come, assets are going to appreciate very steeply and quickly and in my opinion, we might see that sooner than is widely expected.  

EVOLVE: Where do you see growth rate and interest rates going from here and what are some of your favorite areas in the market where you are currently finding attractive opportunities?

RABIA FIDA: Growth rates should climb up in Pakistan as predicted by the recent World Bank estimates especially in the context of the CPEC and other energy projects in the pipeline as we all hope. Interest rates, in my view, are currently at sustainable levels and may remain lower for longer than it appears to a number of analysts.

EVOLVE: Any message for the readers of EVOLVE?

RABIA FIDA: I would just like to urge the readers of EVOLVE and investors in general to consider that if they wish to reap the potentially significant rewards from their portfolios, they need to have a long term perspective towards it. Take your time in understanding and selecting an investment option, but once you do then retain it for the originally intended time horizon. If things are not going well, take a moment to stand bank and regain perspective of the parameters you had in mind while making the investment decision.