A Guide To Investing In Meezan Gold Fund

Meezan Gold Fund is Pakistan's first Shariah-compliant open-end commodity scheme. It aims to provide maximum exposure to gold prices by investing a significant portion of its net assets in deliverable gold-based contracts available on the Pakistan Mercantile Exchange (PMEX). The fund offers an affordable and secure investment option, eliminating the hassle of buying, storing, and transporting physical gold. With a focus on capital appreciation and hedging against inflation or currency devaluation, Meezan Gold Fund is suitable for investors seeking long-term growth while diversifying their portfolios. It is managed by the only Shariah-compliant Asset Management Company in Pakistan, ensuring ethical investments.

How to open an account with Meezan Bank

Meezan Bank is Pakistan's first and largest Islamic bank, offering a range of Shariah-compliant products and services. The bank has a wide network of over 1000 branches across more than 320 cities in the country.

You can open a Meezan Bank account through their Meezan Digital Account Opening App, which promises a simple, safe, and secure process. The app offers a wide range of account types, from savings to current accounts, and provides benefits such as debit card control, fund transfers, ATM access, and free internet and mobile banking.

To open an account, you will need to verify your identity and provide personal information. While the exact requirements may vary, some basic information usually needed for account opening in Pakistan includes:

• Computerized National Identity Card (CNIC) or National Identity Card for Overseas Pakistanis (NICOP) for Pakistani citizens. For non-resident foreigners, a copy of the passport is required.
• Proof of address, such as a utility bill or bank statement.
• Recent passport-size photographs.
• Initial deposit, which varies depending on the type of account.

Additionally, for non-resident Pakistanis, Meezan Bank offers a Roshan Digital Account, which can be opened digitally and provides Shariah-compliant banking services.

Advantages of the Meezan Gold Fund

The Meezan Gold Fund is Pakistan's first Shariah-compliant open-end commodity scheme. Here are some advantages of investing in the Meezan Gold Fund:

Security and Convenience

The fund offers security without the hassle of buying, storing, and transporting physical gold. This means that investors can avoid the inconvenience and potential risks associated with holding physical gold.

Affordability

The Meezan Gold Fund has a low initial minimum investment amount requirement, making it an affordable option for those looking to invest in gold. The minimum investment amount is Rs. 5,000, with subsequent investments starting at Rs. 1,000.

Capital Appreciation and Hedge Against Inflation

The fund aims to provide capital appreciation over the long term by investing in gold instruments. Gold prices in Pakistan are derived from the dollar rate against the rupee, protecting investors from the rupee's depreciation against the dollar. Additionally, the fund serves as an effective hedge against rising gold prices for long-term purchases of gold jewellery.

Professional Management

The Meezan Gold Fund is managed by experienced fund managers with a proven track record. The fund is supervised by a reputable Shariah advisor, Dr. Muhammad Imran Ashraf Usmani, ensuring that all investments are Shariah-compliant.

Diversification

The fund provides a convenient means of diversification for investment portfolios. By investing in gold instruments, investors can add a valuable commodity to their portfolios and potentially reduce their exposure to other asset classes.

Disadvantages of the Meezan Gold Fund

The Meezan Gold Fund is not a 100% gold fund. Physical gold can be challenging to find, so to hedge the risk, the fund keeps a maximum of 30% of its money in an Islamic bank deposit. As of November 2021, they had 80.5% of assets invested in gold and the rest in deposits. This means that their return will lag if gold prices in international markets rise.

There is a chance that gold prices in international markets could fall. Since 2015, there have been five instances where gold prices have dropped by more than 15%. Although prices usually recover quickly, it is something to keep in mind.

The Meezan Gold Fund also charges higher fees than other funds. They charge a total of ~3%, including a 1% management fee and a 2% price adjustment charge (1% paid each time you invest or withdraw money). So, if the returns are 10%, you will effectively make only 7%.

The historical performance of the Meezan Gold Fund

The Meezan Gold Fund (MGF) is Pakistan's first open-end commodity scheme, allowing investors to purchase high-purity gold without the hassle of buying, transporting, or storing physical gold. The fund aims to provide maximum exposure to gold prices in a Shariah-compliant manner by investing a significant portion of its net assets in deliverable gold-based contracts available on the Pakistan Mercantile Exchange (PMEX).

As of November 2021, MGF had 80.5% of its assets invested in gold, with the remainder in Islamic bank deposits. The fund's performance is closely tied to international gold prices, providing investors with returns based on global gold price movements.

In terms of historical performance, the Meezan Gold Fund has had its ups and downs. In 2022, it gave investors the highest return among all mutual funds in Pakistan. However, there have been years when gold prices have declined significantly, with five instances since 2015 where gold prices fell by more than 15%.

Despite these fluctuations, the fund has generally done reasonably well according to its benchmark. MGF provides a convenient and secure way to invest in gold, offering capital appreciation over the long term and serving as a hedge against inflation or currency devaluation.

Who should invest in the Meezan Gold Fund

The Meezan Gold Fund is Pakistan's first Shariah-compliant open-end commodity scheme. It is suitable for investors who are seeking capital appreciation over the long term and a hedge against inflation or currency devaluation.

• The stock market is lacklustre and going down almost every day
• There is a risk of a further increase in interest rates, which might lead to a further decline in stock prices
• No visible signs indicate when the fall in the rupee will stop against the dollar
• You are concerned that your investment value will fall further
• You don't want to put more money into averaging your investments
• You understand that you are losing your hard-earned wealth in dollar terms
• You don't have enough money to buy real estate
• It allows investors to invest in high-priced and valuable commodities in the most efficient manner.
• It is a full Shariah-compliant investment.
• It offers the purchase of high-purity gold without the hassle of buying, transporting, and storing physical gold.
• It is an affordable investment with a low minimum amount requirement.
• It is managed by experienced professionals from the only Shariah-compliant Asset Management Company in Pakistan, with a solid track record of over 27 years.
• It provides a hedge against rising gold prices for long-term purchases of gold jewellery.
• It offers diversification for investment portfolios.

However, it is important to note that the Meezan Gold Fund is not a 100% gold fund. It keeps a maximum of 30% of its money in an Islamic bank deposit to hedge the risk of finding physical gold, which can sometimes be challenging. Additionally, investors should be aware that there is a risk of principal erosion associated with this fund.

Frequently asked questions