The Pakistan Stock Exchange lists fewer than a dozen ETFs in total, and only two are Shariah-compliant: the Meezan Pakistan Exchange Traded Fund (MZNPETF, listed October 2020) and the Mahaana Islamic Index ETF (MIIETF, listed March 2024). If you want passive, screened equity exposure in a single traded instrument, this is the entire menu. The two funds are more different than their similar mandates suggest, and both publish enough data to compare them honestly.
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The basics side by side
MZNPETF: launched October 5, 2020 by Al Meezan, Rs 1.44 billion in size at June 30, 2026, 0.50% actual management fee, tracking the Meezan Pakistan Index, day-end NAV Rs 17.81 on August 3, 2026. MIIETF: launched March 11, 2024 by Mahaana, Rs 1.99 billion at June 2026, 0.75% management fee with a published 1.15% total expense ratio and zero front or back loads, tracking the MII30 index, NAV Rs 17.23 at June 30, 2026. The younger fund has already overtaken the older one on assets despite launching four years later.
Both funds track indexes their own managers built
Neither ETF tracks the KMI-30. Al Meezan constructs and maintains the Meezan Pakistan Index, selecting Shariah-compliant stocks weighted toward market capitalization and traded value, with semi-annual reconstitution. Mahaana maintains the MII30: the top 30 Shariah-compliant stocks by free-float market cap with average annual turnover above PKR 10 million, also recomposed twice a year. Self-indexing is common globally but worth understanding: the manager grades its own homework when it reports tracking performance, and index changes are the manager's call. Mahaana's June 2026 recomposition added six names including Colgate-Palmolive Pakistan and K-Electric and removed six including Abbott and Pioneer Cement.
Fees and all-in cost
MZNPETF's 0.50% fee is the cheapest equity product Al Meezan sells; MIIETF charges 0.75% but publishes a full TER of 1.15% (0.93% to 0.94% excluding government levies). MZNPETF's page does not publish a comparable TER, so an exact all-in comparison is not possible from public data, a small transparency win for Mahaana. Neither charges a load on-exchange; your real entry cost is brokerage commission plus bid-ask spread. Both are far cheaper than the 2% front-end load on Al Meezan's open-end index fund, and dramatically cheaper than 3%-fee active equity funds.
Tracking: the honest ugly numbers
In FY26 (the year ended June 30, 2026), MZNPETF returned +39.59% against its benchmark's +41.80%, a lag of about 2.2 points, consistent with fees plus cash drag. Its history is patchier: in FY24 it trailed its index by 8.2 points (+85.78% vs +93.94%). MIIETF's June 2026 report publishes a tracking-difference table outright: -0.43% over one month, -3.38% over one year, and -14.48% cumulatively since its March 2024 inception. Credit to Mahaana for printing those numbers; they are wide for an index product. If your reason for buying an ETF is 'give me the index return', neither fund has delivered it tightly in every period, and MIIETF's since-inception gap deserves monitoring.
What is inside
MIIETF at June 2026 was 100% equities and concentrated: Fauji Fertilizer 16.51%, Engro Holdings 7.29%, Hub Power 7.15%, Meezan Bank 7.12%, Lucky Cement 6.80%, with the top seven holdings around 58% of the fund. Sector weights led with fertilizer at 20.97% and oil and gas exploration at 18.31%. MZNPETF uses full replication and must keep at least 85% of assets in index constituents at all times. Concentration is not a flaw of either manager; it is what a 30-stock screened index in a concentrated market looks like. Expect the ride to be bumpy: MZNPETF fell 23.41% in FY22.
Liquidity and how to buy
You buy either ETF like a stock: through a PSX brokerage account with CDC custody, during market hours, at the quoted price. MIIETF's authorized participants are JS Global Capital and Adam Securities, who create and redeem units to keep the price near NAV. Both funds are small by global standards (under Rs 2 billion each), so use limit orders and compare the quoted price to the published iNAV before trading. ZLK Islamic, Pakistan's first fully Shariah-compliant brokerage, is a natural fit if you want the broker itself to be Islamic; its July 2024 agreement with Dubai Islamic Bank Pakistan explicitly covers ETF access.
The verdict
Choose MZNPETF if you want the lower headline fee and the longer track record through a full cycle, including the ugly FY22. Choose MIIETF if you value zero loads, fuller disclosure (published TER and tracking table) and don't mind a fund that is still proving itself; its one-year return of +34.86% trailed both its own index (+38.24%) and the KMI-30 (+39.18%). Honestly, for many investors the open-end KSE Meezan Index Fund is the third contender: 0.75% fee, no brokerage account needed, FY26 +38.09% vs KMI-30 +39.18%, though it carries a 2% front-end load. Compare all three on the HalalWallet investing hub.
Frequently asked questions
Do I need a brokerage account to buy these ETFs? Yes. Both trade on the PSX like ordinary shares, so you need a broker and a CDC sub-account. If you would rather avoid brokerage entirely, an open-end index fund bought directly from the AMC gets you similar exposure with a load instead of a commission.
Why don't these ETFs just track the KMI-30? Each manager built its own index (Meezan Pakistan Index, MII30) with liquidity filters suited to a small, replicable basket. The practical differences from the KMI-30 are modest but real; in FY26 the KMI-30 returned 39.18% while MII30 returned 38.24%.
What is tracking difference and why is it so large here? It is the gap between the fund's return and its index's return, caused by fees, cash held for redemptions, and friction at recompositions. MIIETF's published since-inception gap of -14.48 points is large; small fund size and a fast-rising market amplify the effect. It is the main number to watch on both products.
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Do the ETFs pay dividends? Yes, both have distributed. MIIETF paid Rs 2.25 plus Rs 0.75 per unit in June 2025 and Rs 0.50 in June 2024; MZNPETF's distributions flow through Al Meezan's normal payout process. Dividends from screened companies still require no purification work from you; the fund handles compliance.
Which is more halal, an ETF or an index fund? Neither has an edge in fiqh terms; both hold the same screened stocks under certified Shariah supervision (Al Meezan's board chaired by Taqi Usmani; Mahaana certified by Al Hilal Shariah Advisors). The choice is about cost, convenience and tracking, not permissibility.