Mutual Funds Shift Money Out of Stocks as PSX Volatility Spooks Investors

Mutual funds in Pakistan reduced their equity exposure in February 2026 as market volatility weighed on investor sentiment, with equity assets under management (AUMs) falling 9 percent month on month to Rs. 678 billion, according to a report by Arif Habib Limited.

The report shows that total mutual fund industry AUMs stood at Rs. 4.31 trillion in February, remaining largely unchanged compared to the previous month. However, the composition of investments shifted as funds moved toward relatively safer instruments.

Equity investments accounted for about 16 percent of total industry assets, while debt investments rose 2 percent month on month to Rs. 3.63 trillion, representing roughly 84 percent of total assets.

Among asset managers, Al Meezan Investment Management Limited remained the largest with Rs. 648 billion in total AUMs, followed by NBP Fund Management Limited with Rs. 519 billion and MCB Investment Management Limited with Rs. 404 billion. In the conventional equity segment, National Investment Trust Limited held the largest equity portfolio of about Rs. 91 billion.

The report also highlighted that mutual funds remained heavily invested in a relatively small group of large listed companies. The top 30 stocks accounted for 63.2 percent of total equity AUMs, equivalent to around Rs. 428 billion.

Major holdings included Oil and Gas Development Company Limited, Fauji Fertilizer Company Limited, Pakistan State Oil Company Limited and Pakistan Petroleum Limited.

In terms of fund participation, OGDC remained the most widely held stock with 89 mutual funds investing in it, followed by Lucky Cement Limited with 85 funds and Fauji Fertilizer with 82 funds. Meanwhile, PSO had one of the highest levels of mutual fund ownership, with funds collectively holding about 42.7 percent of its free float.

The decline in equity exposure reflects cautious positioning by asset managers amid recent volatility in the Pakistan Stock Exchange and global market uncertainty linked to geopolitical tensions and commodity price fluctuations.

However, the concentration of holdings in large, fundamentally strong companies suggests funds continue to maintain exposure to core sectors such as energy, banking, cement and fertilizers.