Pakistan’s Islamic mutual fund sector is showing strong momentum, capturing nearly half the market as investors turn to Shariah-compliant options. According to the Securities and Exchange Commission of Pakistan (SECP), these funds now represent 42.8% of all mutual funds and 43.9% of total assets under management (AUM) as of June 2025. This marks a clear shift toward ethical investing, with assets climbing steadily over the past four years.
The growth comes as Pakistan’s Islamic finance industry matures, offering diverse choices like equity and income funds that align with religious principles while delivering competitive returns. Regulators like SECP and the State Bank of Pakistan ensure compliance through rigorous screening, making these funds a go-to for everyday savers and institutions alike.
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Year-Over-Year Asset Growth
The sector has expanded rapidly since mid-2021. SECP data highlights a near fivefold increase in assets, from PKR 334 billion in June 2021 to PKR 1,726 billion in June 2025. This trajectory reflects broader trust in Shariah-based products, which avoid interest and unethical sectors.
Annual jumps include:
- June 2022: PKR 434 billion (up 30%)
- June 2023: PKR 722 billion (up 66%)
- June 2024: PKR 1,131 billion (up 57%)
- June 2025: PKR 1,726 billion (up 53%)
Such gains outpace conventional funds in several periods, driven by demand for halal options amid economic shifts.
Breakdown by Category
Diversity across fund types bolsters the sector’s appeal. As of June 2025, money market funds lead with PKR 977 billion in Shariah-compliant assets, followed by fixed income at PKR 456 billion and equity at PKR 302 billion. These compare favorably to conventional counterparts, showing Shariah funds often hold larger shares in stable categories.
| Category | Shariah-Compliant (PKR Bn) | Conventional (PKR Bn) |
|---|---|---|
| Money Market | 977 | 91 |
| Fixed Income | 456 | 20 |
| Equity | 302 | 50 |
| Asset Allocation | 146 | 11 |
| Fixed Return | 91 | 48 |
| Others | 24 | 20 |
This spread helps investors match risk levels, from low-yield money market to growth-focused equity funds.
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Overall Asset Allocation
Within Shariah-compliant funds, allocation favors liquidity and stability. Money market instruments claim 49.8% of total assets (PKR 974 billion), while fixed return holds 36.6% (PKR 716 billion). Equity makes up 14.7%, with smaller slices for asset allocation (5.3%) and fixed income (6.6%).
A pie chart breakdown:
- Money Market: 49.8%
- Fixed Return: 36.6%
- Equity: 14.7%
- Others: <1%
This conservative tilt suits risk-averse investors, yet equity exposure supports long-term growth.
Number of Funds and Future Outlook
The landscape includes 41 Shariah-compliant funds/plans, up from prior years, spanning money market (31.3%) and fixed income (23.1%). Equity and asset allocation each hold about 15-23%, ensuring broad coverage.
Experts see continued expansion, with projections for Islamic funds to exceed 50% market share by 2027, fueled by digital platforms and tax incentives. Funds like Meezan Sovereign continue to lead, offering yields above 13% in some cases.
For deeper dives, check MUFAP’s latest stats: Mutual Funds Association of Pakistan – Industry Data. It updates daily on AUM and performance.
This rise signals a maturing market where faith-based investing meets solid returns. Nawa Times will track SECP updates—bookmark for more on Pakistan’s financial shifts.
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