ISLAMABAD - In line with the objective of creating a competitive and deep Exchange Traded Funds (ETFs) market, the Securities and Exchange Commission of Pakistan (SECP) has allowed various categories of mutual funds to invest in ETFs. Through Circular No. 7 of 2022 dated July 5, 2022, these mutual funds have been allowed to invest up to 10% of their assets in equity ETFs, income ETFs and money market ETFs. As a result, now the mutual funds will have access to the benefits of investing in ETFs such as trading flexibility, diversification of portfolio and transparency of underlying holdings on a daily basis. Earlier, the SECP had allowed equity oriented mutual funds to invest in Equity ETFs only. Like equity ETFs, income ETFs and money market ETFs are also passively managed and trade on a securities exchange. Income ETFs allow ordinary investors to gain diversified and passive exposure to fixed income securities such as corporate bonds or government treasury in an inexpensive manner, while money market ETFs are similar to income ETFs albeit with higher portfolio credit rating requirements and shorter maturity of holdings. Internationally, ETFs are among the fastest growing investment products, customized to cover specific arrays of sectors, stocks, commodities, bonds, futures and other asset classes.