OPEN-ENDED MUTUAL FUNDS AS A TOOL TO STRENGTHEN THE NATIONAL ECONOMY: EVIDENCE FROM PAKISTAN IN THE PROSPECT OF BUDGET – 2026

Abstract

The aim of this study is to explore the contribution of open - ended mutual funds in the improvement of Pakistan's national economy under the context of the Budget 2026. The paper investigates the relationship between the performance of mutual funds (measured as Net Asset Value (NAV) changes) and the macroeconomic variables such as gold prices, oil prices, exchange rate, and inflation, using time-series data over 12 years from 2010-2022. The ARDL model is used to capture the short run and long run dynamics. The findings suggest that the depreciation of exchange rates and inflation have both strong negative impacts on NAV, whereas gold prices have strong positive hedging effects. Oil prices have an ambivalent effect.The study has established the long-run cointegration of the variables and recommended that open-ended mutual funds are capable of functioning as the stabilizer of the economic growth. Policy recommendations are consistent with the priorities of Pakistan's Budget 2026