Pakistan saves seven rupees out of a hundred. India saves thirty.

A career that began in 1988, and a company that began with three people

The episode opens with Muzamil introducing Mohammad Shoaib, the CEO of Al Meezan Investments, and acknowledging up front that the guest has a hard stop for an important meeting. The conversation moves quickly, but it does not feel rushed — Shoaib has clearly told this story before, and he tells it with the calm of someone who has watched a single institution grow for twenty-six years.

He graduated from IBA Karachi with a BBA Honours and MBA, finishing in 1988. He spent a brief stint at a regular job that did not interest him, taught a semester at IBA on request, then joined a Pakistani investment company where his department covered capital-markets investments. “When I came into the investment area,” he tells Muzamil, “I liked it very much. It was very attractive to me.” He stayed five years, managing the firm’s portfolio.

The thinking that became Al Meezan came next. If the team had the expertise to manage their own employer’s money, why not extend that expertise to other investors? Shoaib was given the brief of building the company. They started with three employees, one room, and a single floated fund of two hundred and fifty million rupees. He describes the current state without ceremony: about six hundred and fifty employees, twenty-five offices, eighteen mutual funds, and roughly two hundred billion rupees under management — making Al Meezan, by his account, the largest asset management company in Pakistan.

Seven rupees versus thirty

Muzamil pivots to the question that animates most of the conversation: why don’t Pakistanis save, and when they do, why don’t they invest? He points out that people keep cash in bank accounts, or worse, in chests at home, “not realising it’s getting devalued.” He describes a colleague who had recently started saving and asked him, with no real idea where to start, whether she should put money into property.

Shoaib’s answer is structural. “Pakistan’s domestic savings rate is about seven percent right now,” he says. “If we compare it to India and Bangladesh, theirs is thirty to thirty-one percent. Out of every hundred rupees, people there save thirty. Here, they save seven.” He attributes the gap to two things. The first is disposable income — for many households, there is simply less left after expenses. The second, and the one he keeps returning to, is product literacy. “Even if there is something left, people don’t know where to save it. So rather than keep the money in a chest where there’s no earning, they say: might as well spend it.”

The mutual fund, in his framing, is the answer to the second problem. Small investors pool money, the pool gets invested by a professional, and different products exist for different risk appetites. A retiree who needs stable income gets a money market fund. A young salaried earner saving for retirement gets a pension fund — Meezan Tahaffuz Pension Fund, which he describes as the largest voluntary pension fund in Pakistan. Al Meezan runs roughly eighteen such products. A new investor is taken through a risk assessment — seven or eight basic questions about objective, timeline, liquidity, risk tolerance — before any product is recommended.

Shariah compliance as a structural choice

Muzamil brings up the Shariah-compliance question — both Meezan Bank and Al Meezan Investments are built on it — and asks what that actually means in practice.

Shoaib’s answer is more interesting than a marketing line. The vision, he says, was to make Shariah-compliant banking the first choice for Pakistani savers, and to do the same for investing. The compliance work is anchored by Dr Imran Usmani, who Shoaib describes as a globally recognised Shariah authority who has sat on the boards of banks and asset managers around the world.

But the more concrete point is that several categories of instruments — derivatives, options, highly leveraged structured products — are not permissible under Shariah. Shoaib argues this is not just a religious filter but a risk filter. “The basic reason the 2008 global financial crisis happened,” he says, “was that there were structures that were highly risky and had no asset behind them.” A compliance framework that excludes those structures by default also excludes the failure modes that come with them. It is a quiet point, and one of the sharper moments in the conversation.

How a saver actually opens an account

Muzamil presses on a real-world friction: Pakistan’s financial services have a paperwork problem, and people give up. If someone banks at Standard Chartered and wants to invest with Al Meezan, what is the process?

Shoaib walks through three paths. The traditional paper route: call the toll-free 0800-HALAL number, an investment advisor comes to the saver’s home or office, paperwork is filled out, and the account opens against any existing bank account — it does not need to be a Meezan Bank account. The branch route: walk into any of Meezan Bank’s roughly eight hundred branches, or any Al Meezan Investments branch. The digital route, which he emphasises has accelerated post-COVID: a paperless flow through the mobile app or website where the saver uploads their CNIC and the account opens within one to two business days after a compliance check. He references the State Bank’s forthcoming Raast programme as the next step, which he expects will make mutual fund investment through the rails even simpler by March of the following year.

The minimum cheque he names is striking. Five thousand rupees, he says, is enough to open an account. “Our focus is exactly this — that new investors come in, small investors come in. If a student invests a thousand rupees from their pocket money today, tomorrow when they are a business leader they will invest fifty million.”

The mutual fund as a doctor

The phrase Shoaib uses for what a mutual fund actually does is worth quoting in full. “A mutual fund is like a doctor. You go to the doctor, ask which product is suitable for me, and then invest accordingly. You give the money to a professional fund manager, who invests on your behalf.”

He uses the equity fund — the stock-market fund — as his example. A direct retail investor in the Pakistan Stock Exchange has to decide which company to buy and at what price. An equity mutual fund diversifies across textile, cement, automobile, banking, oil and gas, building a portfolio so that no single name carries the whole position. Two income streams result: dividends, which are distributed to unit holders at year-end, and capital gains.

The capital-gains point is the one most retail investors miss, and Shoaib spells it out twice. If a direct stock investor sells a share at a gain, capital gains tax is owed immediately. In a mutual fund, the fund manager buys and sells underlying shares constantly, accruing gains inside the fund, with no tax due until the unit holder themselves redeems. The compounding inside the wrapper is meaningful, and it is the kind of edge most savers do not realise they are leaving on the table.

He layers on a second tax point. The Federal Board of Revenue allows a tax credit on mutual fund investment up to a cap of two million rupees. On a fifty-lakh annual income, an investor putting ten lakhs into a mutual fund is taxed as if their income were forty lakhs, not fifty.

Voluntary pension funds and the Chilean model

Shoaib then walks through the pension product, which sits in a different tax regime entirely. Up to twenty percent of annual income can be contributed to a voluntary pension fund with no income tax on the contribution. The growth inside the fund accrues without tax. Withdrawals — taken from age sixty, or after a minimum twenty-five-year hold, spread over ten years — are also untaxed. “It’s a totally tax-free structure,” he says, “which has actually been developed on a Chilean model. Exempt, exempt and exempt.”

The structural advantage of pension money, he notes, is that the fund manager knows it cannot be withdrawn on demand. That frees the portfolio to sit in long-duration positions where the expected return is higher. An open-end mutual fund, by contrast, must always hold enough liquidity to redeem any unit holder on request, and that liquidity drag shows up in returns.

Why ETFs have not taken off in Pakistan

Muzamil brings up Meezan ETF, which he says has come up on a previous podcast. Shoaib explains the structure plainly. An ETF is a basket disclosed up front — eight or ten or twelve names, fixed proportions — that an investor can buy and sell through a stockbroker via a designated market maker. The standard ETF case, globally, is that markets are efficient and active management cannot beat the index after fees, so an investor is better off paying a much lower fee for the basket.

His honest assessment is that this case has not arrived in Pakistan. “In Pakistan it is not so popular yet,” he says, “because the active fund managers, the mutual funds, their return is normally more than the ETF.” The product exists. The structural conditions for it to win — efficient markets, narrow alpha — do not.

Three hundred and fifty thousand investors in a country of two hundred and thirty million

Muzamil asks how many people actually invest in Pakistan’s stock market. Shoaib’s number is the one that lands hardest in the conversation. “Around three to three and a half lakh investors,” he says — three hundred to three hundred and fifty thousand — in a country of two hundred and thirty million people. Mutual fund investors, he adds, sit around the same order of magnitude. India’s mutual fund investor base, he notes, is roughly one hundred and twelve million.

The penetration argument that follows is straightforward. Sixty percent of Pakistan’s population is under thirty. There are one hundred and eighty million SIMs in the country. If a digital onboarding flow can be paired with genuine investor education, the addressable market is essentially the entire population.

Muzamil pushes on the demand-side consequence. If three hundred and fifty thousand investors become three million, and the supply of listed stocks does not change, what happens to prices? Shoaib answers in two parts. More demand at fixed supply lifts prices, but that is also exactly what attracts new listings. The Pakistan stock market currently trades at a price-earnings multiple of about 5.4, which he says is among the lowest he has seen in thirty years — the only comparable troughs were 1998, after the nuclear tests, and 2008, after the global financial crisis. “These are very attractive valuations,” he says. “There’s a huge upside for the investors.”

Six to seven trillion rupees earning zero

Late in the conversation, Muzamil and Shoaib step back to the macro picture. Pakistan is, in Muzamil’s framing, a consumption-led economy, and the way out is to shift consumption forward into investment so the supply side can grow. Shoaib agrees and offers the number that gives the argument weight. The currency in circulation outside the banking system — cash sitting in chests, in homes, earning nothing — is between six and seven trillion rupees. That is the dead capital pool the savings-and-investment industry exists to mobilise.

He closes with the macro frame in plainer terms. Pakistan’s foreign currency debt was roughly thirty to thirty-five billion dollars when he graduated in 1988. It is now around one hundred and twenty billion. The country’s revenue has consistently run below its expenditure, and the gap has been filled by borrowing. The way out is not more borrowing. It is productivity — in agriculture, where cotton yields have fallen from thirteen or fourteen million bales to six and a half on the same land — and in human capital, where Pakistan’s software exports were under a billion dollars while India’s were over a hundred billion. “Sixty percent of our population is under thirty,” he says. “If we get our education right, and the utilisation of our people right, then I think Pakistan has a very good future, inshallah.”

Muzamil thanks him, notes the disclaimer that this is not a sponsored episode — Meezan came up repeatedly on prior episodes about Pakistani investing — and points listeners to The Pakistan Pivot, the policy-focused show he had recently launched. The conversation ends where it began: with a guest who has a meeting to get to, and a host who has just walked his audience through the entire shelf of investment products most of them did not know existed.