well Nauman, not all redemptions. Mutual Funds with direct exposure on equity securities have been blocked. That too goes in favor of MF holder.
Moreover, money/income market funds are still considered as safe and people/ investors are investing & Redeeming as per routine.
This may clear your views:
1. Is the current decision by the SECP to freeze all mutual funds? If not then which
funds have been frozen?
As per the SECP Circular sent on 7th October 2008, only funds with equity exposure
(equity funds, balanced funds, asset allocation funds etc.) have been frozen. This
means that no investment, redemption, transfer of units between funds etc can be
done during this period. At this point no redemption freeze has been announced for
money market or income funds.
2. Why has the decision to freeze all equity funds been taken by MUFAP and the
This decision has a direct connection with the freeze on the stock market. As equity
funds are unable to raise cash in the case of redemptions by selling down their
portfolios, this decision has been taken to limit redemptions until three days after the
market freeze ends. Such redemptions requests are expected to put further pressure on
the equity market and hence the decision has been implemented.
3. Is the current decision by the SECP going to impact investment in money
market / income funds?
No. The decision taken by MUFAP and SECP does not affect income and money