INTERVIEW WITH MOHAMMAD SHOAIB, CEO AL MEEZAN INVESTMENT MANAGEMENT LIMITED.
PAGE: TELL ME SOMETHING ABOUT YOURSELF, PLEASE?
MOHAMMAD SHOAIB: I completed my graduation and post graduation from Institute of Business Administration in Karachi, with major in Finance and minor in Marketing. After completing my MBA in 1988, I focused primarily in the area of investment management over the last 25 years. I managed the proprietary investment portfolio of Pak Kuwait Investment Company for about 6 years after which Pak Kuwait decided to set up an asset management company in collaboration with Jardine Fleming Holdings Limited (Hong Kong) and National Investment Trust Limited. I was mandated to initiate this process and when Al Meezan Investment Management Limited was set up in 1995 as a joint venture between these three institutions, I was made responsible to head the newly established company as it Chief Executive Officer.
We started on a small scale initially with a very lean organization structure and while continuing to manage Pak Kuwait portfolio, we launched first closed-end fund names as Al Meezan Mutual Fund in 1995. Alhamdulillah, the fund has demonstrated stellar performance over the last 18 years and has continued to grow in size over the years. In 2003, we were able to get the license from SECP to launch open end Islamic funds in the country, and that is where the real growth of Al Meezan Investments started. When we set up Al Meezan Investments, I felt the need to update and brush up my skills in investment management and acquire a specialized qualification in this regard. Hence, I decided to pursue Chartered Financial Analyst (CFA) designation, which is the globally recognized gold standard in the area of investment management. However, I could not take out time to start the program until 1997. Alhamdulillah, I completed all three levels of CFA exam between 1997 and 1999 and received CFA Charter.
With a need to focus exclusively and fully on this venture and on launch of open-end funds, I decided to give up the role of fund manager for Pak Kuwait. We launched our first open end equity fund in August 2003, which was started with a record seed capital of about 900 million contributed by a number of leading institutions in the country. Alhamdulillah, today the size of Meezan Islamic Fund has grown tremendously and it has the privilege of being one of the best performing equity funds in the country. It is also the largest equity fund in the private sector with net assets of over Rs760 crores. Once the MIF was launched, there was no stopping. We then launched the first Islamic Balanced Fund in 2004, the first Islamic Income Fund in 2007 and then launched Meezan Cash and Sovereign Funds. We also launched Meezan Capital Protected Fund and KSE Meezan Index Fund, again the first Islamic Index Tracker Fund.
In between, the first Islamic voluntary pension scheme Meezan Tahaffuz Pension Fund was launched. The most recent addition to our portfolio has been Meezan Fund of Funds, which is a smart tool for financial planning and achievement of various objectives in life including education of children, construction of house, etc.
PAGE: COULD YOU PLEASE TELL US ABOUT THE GROWTH OF ISLAMIC FINANCE INDUSTRY AS A WHOLE AND SPECIFICALLY THE ISLAMIC MUTUAL FUND INDUSTRY OVER THE PAST DECADE?
MOHAMMAD SHOAIB: Over the past 10 years, growth in the Islamic Finance Industry has been impressive with the Islamic industry diversifying from Islamic banks to Islamic Insurance (Takaful) companies and Islamic mutual funds. It was during this period that global financial markets faced a crisis, despite which Islamic mutual funds enjoyed success in attracting investments from Muslim and non-Muslim investors. Growth in Islamic mutual funds has been highly impressive globally and in Pakistan as well. Currently, there are 29 Islamic open-end funds in Pakistan.
PAGE: WHAT ARE THE KEY ATTRIBUTES CONTRIBUTING TOWARDS SUCH IMPRESSIVE GROWTH IN ISLAMIC MUTUAL FUNDS?
MOHAMMAD SHOAIB: Islamic institutions have an obligation to work under the guidelines of Islamic principles and philosophy. The crux is to work under the strict code of Shariah, and under Shariah guidelines a core principle is that all buy and sell transactions need to be backed by a physical asset. Besides this, transactions in businesses involving interest, gambling, alcohol, etc and speculation are all prohibited. In short, the essence of Shariah compliant institutions is to uphold Islamic ideals and principles while conducting their business. All of this translates into halal mode of earnings for like-minded people. Moreover, Islamic form of investments due to their inherent nature (of Shariah Compliance) is more prudent in comparison to conventional modes of investments, this is seen as an advantage both by Muslim and non-Muslim investors alike.
PAGE: WHAT MARKET CHANGE DO YOU SEE IN THE NEAR FUTURE?
MOHAMMAD SHOAIB: Islamic finance sector will continue to grow at double the pace of growth for the conventional finance segment as we have witnessed in the last decade. Similarly, I can foresee Islamic finance reaching new markets globally where it never reached before.
Talking specifically about Islamic asset management, I anticipate that the market share of Islamic funds will grow to about 25 to 30 percent by 2020 as compared to the current market share of 17 percent.
PAGE: WHAT KIND OF CHANGE WOULD YOU LIKE TO SEE IN THE ISLAMIC ASSET MANAGEMENT INDUSTRY?
MOHAMMAD SHOAIB: Islamic asset management in the country is on a very sound footing. However, two important areas where a lot of work needs to be done are: (1) Creating awareness about Islamic funds (2) availability of a distribution network to provide access to the investors all over the country.
PAGE: WOULD YOU LIKE TO TALK ABOUT THE CHALLENGES, THE ISLAMIC MUTUAL FUND INDUSTRY FACED?
MOHAMMAD SHOAIB: Islamic asset management industry in Pakistan has faced many challenges in the past but Alhamdulillah, it has been able to overcome most of those challenges in the last decade. The first and foremost challenge was development of Shariah screening criteria relevant to the domestic market and with the guidance of Shariah advisors, and in particular, Dr. Imran Ashraf Usmani these have been successfully developed. The second big challenge was the availability of investment options for income and money market funds.
This has also been successfully overcome with the development of Ijarah sukuk structure, which is now being widely used by both private sector and the government to raise finances in a Shariah compliant way. As a result, while one could only launch Islamic equity funds in 2003 (when Meezan launched its first open-end Islamic fund), today there is a complete range of investment solutions available for Shariah compliant investors, which includes Shariah compliant stock funds, income funds, money market funds, capital protected funds, balanced funds and voluntary pension funds.