Gold has long been a popular form of savings in Pakistan. Many families keep gold jewellery as a store of value. However, physical gold also brings concerns about purity, storage and security.
Mahaana has introduced Mahaana Gold as a digital alternative for people who want to invest in gold. The product offers units in the Mahaana Islamic Gold Fund (MIGF).
The fund is an open-end Shariah-compliant investment scheme. It invests in deliverable physical gold instead of contracts that only track gold prices.
IPO Opens With Rs10,000 Minimum Investment
The initial public offering has a minimum investment requirement of Rs10,000. Further investments can be made with amounts starting from Rs5,000.
The IPO will close on September 10 at 4pm. Investors can subscribe through the Mahaana app.
Units will be allotted on September 11 at a single issue price. The offer size for this round is PKR100 million.
Allocations will be made on a first-come, first-served basis. There is also no front-end load during the IPO period.
After the IPO, a front-end load of up to 1.5% may apply.
Physical Gold Backs the Fund
The fund is backed by actual deliverable physical gold. Mahaana purchases the gold through the Pakistan Mercantile Exchange (PMEX).
The physical gold is stored in a secure vault. This means investor units are backed by actual metal.
The fund’s assets are held separately from Mahaana’s own assets. The Central Depository Company (CDC) serves as the trustee.
This structure means the gold is not part of Mahaana’s own balance sheet. It is also protected from claims by Mahaana’s creditors.
A limited portion of the fund remains in cash and Shariah-compliant liquid instruments. This helps the fund handle redemption requests.
Gold is valued at the end of every business day. The valuation determines the daily unit price.
Shariah-Compliant Investment Structure
The fund operates under the Wakalatul Istithmar structure. Under this arrangement, investors appoint Mahaana as an investment agent.
Mahaana receives a disclosed management fee for providing its services. Returns generated by the fund belong to the unit holders.
The fund does not invest in interest-bearing instruments. It also avoids conventional debt and non-compliant securities.
Cash is maintained through Islamic banking accounts. The fund has received certification from SECP’s Islamic Finance Department.
Its Shariah compliance is also reviewed by an independent Shariah Advisory Board. The board is led by Al Hilal Shariah Advisors.
Fees and Redemption Rules
The fund normally carries a front-end load of up to 1.5%. However, this fee is waived during the IPO period.
A management fee of up to 1.5% accrues daily through the unit price. Investors do not pay this fee separately.
There is generally no back-end load after the applicable period. However, withdrawals within 30 days can trigger a back-end charge.
Investors can purchase units on any business day. The minimum first investment is Rs10,000.
Later investments can start from Rs5,000. Redemption requests can be submitted through the Mahaana app.
The redemption amount is transferred to the investor’s registered bank account within six business days.
Other expenses include trustee, custody, audit and regulatory charges. These costs are detailed in the fund’s Offering Document.
Why Mahaana Introduced the Product
Mahaana Wealth CEO and founder Shamoon Tariq has explained the idea behind the product.
He said investors should first understand why they want to buy gold. Jewellery remains suitable for people who need gold for personal use or weddings.
However, investors looking to save for the future may consider a gold fund.
Tariq highlighted several challenges linked to traditional gold purchases. Jewellery is often below 24 karat purity.
The quoted weight can also include stones and other materials. Buyers may still pay gold-related charges on those components.
Making charges further increase the cost of jewellery. Physical gold also needs to be stored safely.
Gold kept at home can create security concerns. Bank lockers provide another option but can add costs and inconvenience.
Gold biscuits can reduce some jewellery-related costs. However, buyers still need to consider purity and secure storage.
Smaller Investments Through Mahaana Gold
Traditional gold purchases can also require a significant amount of money. Tariq noted that smaller gold quantities may have limited availability.
This can make regular gold buying difficult for smaller savers. Mahaana Gold allows investors to build exposure through smaller contributions.
An investor can start with Rs5,000 for subsequent investments. The investment value moves with the price of gold.
Investors can later redeem their units and use the proceeds for other purposes. They can also use those funds to purchase physical gold at the prevailing market price.
The approach removes the need to personally store the underlying metal.
Digital Access and Redemption
The digital structure is designed to make investing easier. Account opening and investment can be completed through the Mahaana app.
According to Tariq, the investment process takes only a few minutes. Individual transactions can be completed much faster.
Selling units also does not require visiting a jeweller. Investors can submit a redemption request through the app.
However, the money is not received instantly.
Mahaana sells the underlying gold through PMEX after receiving a withdrawal request. The settlement process can take several days.
The proceeds are then processed through CDC before reaching the investor’s registered bank account.
Gold pricing is also based on the applicable market price. Investors do not need to negotiate a price with a jeweller.
A Digital Alternative to Physical Gold
Mahaana Gold is not designed to replace jewellery purchases. Instead, it targets people who view gold primarily as a savings or investment asset.
The product offers exposure to physical gold without requiring investors to personally store it.
It also allows smaller investments than traditional gold purchases. Daily valuation provides investors with a published unit price.
The fund structure also addresses concerns around purity, storage and physical security.
Investors should review the Offering Document before making an investment decision. They should also consider applicable fees, taxes and Zakat treatment.
In other news read more about Gold Rates in Pakistan Fall to Rs465,536 Per Tola
The product is available through the Mahaana app. Further information is also provided by the company through its official channels.
