Mutual fund investment in PSX hits 10-year high as money flows into equities

KARACHI (Web Desk) — Mutual fund investment in the Pakistan Stock Exchange (PSX) has climbed to its highest level in a decade, as investors shift funds from low-yield options into the equity market.

According to data released by the National Clearing Company of Pakistan Limited (NCCPL), strong buying by mutual funds has played a key role in the record rally of the KSE-100 Index. The report shows that mutual funds recorded net purchases worth $298 million during the period.

In local currency terms, this translates into an investment of approximately Rs84 billion, marking the largest annual inflow by mutual funds into the PSX since 2016. Market watchers say the renewed interest reflects a clear change in strategy, as investors look for better returns and are willing to take calculated risks.

Data further indicates that capital has steadily moved out of bank deposits and fixed-income instruments such as bonds, finding its way into equities. With interest rates remaining at relatively low levels, returns on traditional savings avenues have lost some of their shine, prompting investors to look elsewhere.

Financial experts believe the trend could continue if the current economic conditions remain stable.

They say lower interest rates have tilted the balance in favor of stocks, making equities more attractive compared to fixed-income options. In simple terms, money is following opportunity, and the stock market is now seen as the place where the action is.

However, analysts also advise caution, noting that stock market gains can be a double-edged sword. While the momentum is strong, investors are urged not to put all their eggs in one basket and to keep a close eye on market risks.

For now, mutual funds appear to be betting big on equities, giving fresh fuel to the PSX rally and signaling renewed confidence in the market’s medium-term outlook.