Every serious Pakistani investor who wants Shariah-compliant equity exposure eventually faces this question. The data below cuts through the marketing and gives you a clear answer - including the counterintuitive finding that MZNPETF's lower management fee is not actually a cost advantage.
Pakistan's ETF market offers exactly two Shariah-compliant equity options on the PSX: the Mahaana Islamic Index ETF (MIIETF) and the Meezan Pakistan ETF (MZNPETF). Both are halal. Both pay dividends. Both track separate Islamic indices. But they are structurally different products with meaningfully different cost profiles, concentration risks, and tracking behaviours.
This comparison uses real fund data from MUFAP, PSX, and both fund factsheets. No estimates. No marketing. Data as of 2026-07-27.
The Full Comparison Table
| MIIETF | MZNPETF | |
|---|---|---|
| Full Name | Mahaana Islamic Index ETF | Meezan Pakistan ETF |
| Fund Manager | Mahaana Wealth Limited | Al Meezan Investments Limited |
| PSX Ticker | MIIETF | MZNPETF |
| Launch Date | March 11, 2024 | October 2020 |
| Benchmark Index | Mahaana Islamic Index (MII30) | Meezan Pakistan Index (MZNPI) |
| No. of Holdings | 30 stocks | 12 stocks |
| AUM | PKR 1,916.9 million | PKR 2,300 million |
| Current iNAV | PKR 16.67 | PKR 17.79 |
| Market Price | PKR 16.61 | PKR 17.70 |
| Management Fee | 0.70% per annum | 0.50% per annum |
| Estimated Full TER | ~1.15% | ~1.41% |
| Top-5 Concentration | ~48% | ~64% |
| Lifetime Tracking Gap | -11.84% | -28.07% |
| 1-Year Tracking Gap | -3.47% | -1.72% |
| SECP Risk Rating | 5/5 Very High | 5/5 Very High |
Data as of 2026-07-27. Source: Mahaana Wealth Limited, Al Meezan Investments, PSX, MUFAP.
The Fee Paradox: Why MZNPETF Is Actually More Expensive
This is the single most surprising finding for investors who compare the two funds on management fee alone.
MZNPETF charges 0.50% management fee versus MIIETF's 0.70%. On the surface, MZNPETF looks cheaper. But the estimated full Total Expense Ratio (TER) tells a different story:
| Fee Component | MIIETF | MZNPETF |
|---|---|---|
| Management Fee | 0.70% | 0.50% |
| Trustee Fee | ~0.15% | ~0.20% |
| SECP Levy | ~0.095% | ~0.095% |
| Shariah Audit Fee | ~0.10% | ~0.40% |
| Other (Audit, Legal) | ~0.10% | ~0.12% |
| Estimated Full TER | ~1.15% | ~1.41% |
MZNPETF's Shariah audit fees are significantly higher because the fund submits its portfolio, rebalancing decisions, and dividend treatment methodology to additional Shariah verification layers. The result: MZNPETF costs approximately 26 basis points more annually than MIIETF, despite its lower headline management fee.
Over a 10-year investment horizon at PKR 1,000,000 initial investment and 12% gross annual return:
| MIIETF (~1.15% TER) | MZNPETF (~1.41% TER) | |
|---|---|---|
| Ending Value | PKR 2,657,000 | PKR 2,613,000 |
| Lost to Fees | PKR 455,000 | PKR 499,000 |
| Difference | - | PKR 44,000 extra cost |
The 0.26% annual TER difference compounds to approximately PKR 44,000 more in fees over 10 years on a PKR 1,000,000 position.
Tracking Gap: The More Important Number
The TER difference matters. The tracking gap matters more.
| Period | MIIETF vs MII30 Benchmark | MZNPETF vs MZNPI Benchmark |
|---|---|---|
| 1 Month | -0.64% | +0.06% |
| 3 Months | -0.69% | +0.05% |
| 1 Year | -3.47% | -1.72% |
| Lifetime | -11.84% (26 months) | -28.07% (68 months) |
In plain terms: Every PKR 100 invested in MIIETF at launch would have grown to approximately PKR 205 by July 2026. The MII30 benchmark returned enough to deliver PKR 217. You lost PKR 12 to tracking friction. With MZNPETF, the same comparison shows PKR 251 received versus PKR 279 possible - a PKR 28 shortfall. The MZNPETF tracking gap is 2.4x larger over its lifetime.
Why MIIETF Tracks Better
MIIETF's 30-stock basket means each rebalancing event involves smaller individual trades - no single stock purchase or sale has an outsized price impact. Mahaana Wealth was also built specifically as a passive ETF manager, so their operational infrastructure is optimised for tracking minimisation.
MZNPETF's 12 concentrated stocks mean each rebalancing creates larger individual trades, driving up market impact costs. The cash drag from dividend accumulation is also proportionally larger when dividends from 12 stocks concentrate into fewer payout events.
Holdings Comparison: Breadth vs. Concentration
MIIETF - 30 Stocks (MII30 Index)
The MII30 selects the top 30 Shariah-compliant stocks by free-float market capitalisation on the PSX. No single stock typically exceeds 12% of the basket. Top-5 concentration is approximately 48%. Sectors covered: energy, fertiliser, cement, Islamic banking, textiles, and technology.
For the full current holdings list, see the MIIETF holdings page.
MZNPETF - 12 Stocks (MZNPI Index)
The MZNPI selects the top 12 Shariah-compliant stocks by market capitalisation. Top holdings can individually exceed 12-15% of the basket. Top-5 concentration is approximately 64%. Heavy in large-cap energy (OGDC, PPL), fertiliser (Engro, Fauji), and cement (Lucky).
For the full current holdings list, see the MZNPETF holdings page.
The practical consequence: If one of MZNPETF's 12 holdings has a bad quarter, that stock's weight amplifies the damage to the ETF's NAV. MIIETF absorbs the same shock across 30 names - the per-stock impact is smaller.
Liquidity: MIIETF Is the More Tradeable ETF
Despite MZNPETF having a larger AUM, MIIETF trades with higher volume and tighter bid-ask spreads on a typical PSX trading day. MIIETF's 30-stock basket mirrors the most liquid PSX names, so Authorised Participants can create and redeem units efficiently - keeping market price close to iNAV.
For a retail investor placing a standard order, neither ETF poses a liquidity problem. For investors placing larger orders (above PKR 500,000 per trade), MIIETF's tighter spreads result in a meaningfully lower execution cost.
Which Index Does Each ETF Track?
MIIETF tracks the Mahaana Islamic Index (MII30) - a proprietary index maintained by Mahaana Wealth. The MII30 is independently screened for Shariah compliance using business activity screening and financial ratio tests (debt-to-assets, interest income ratios).
MZNPETF tracks the Meezan Pakistan Index (MZNPI) - a proprietary index maintained by Al Meezan Investments. It draws from the same KSE Meezan Index (KMI) Shariah-screened universe but selects only 12 stocks versus MII30's 30.
The MII30 and MZNPI are not the same as the KMI30 - the KMI30 is a jointly maintained PSX/Al Meezan index that serves as a reference benchmark, not as the direct tracking target for either of these ETFs.
Portfolio Sizing Guide
Starting out (any portfolio size, first Shariah ETF)
100% MIIETF - Start simple. Lower cost, better tracking, more diversification.
Building a Shariah equity portfolio (PKR 200,000-500,000)
70% MIIETF / 30% MZNPETF - The standard blended allocation. Blended TER is approximately 1.22%.
Long-term wealth building (PKR 500,000+)
60% MIIETF / 40% MZNPETF - With larger capital, the diversification of two separate Shariah indices adds meaningful risk reduction. MZNPETF's longer 2020 track record provides a data anchor for return modelling.
Dividend-focused Shariah investing
50% MIIETF / 50% MZNPETF - MZNPETF's five-year dividend history since 2020 combined with MIIETF distributes cash flows from both indices' portfolio companies across more of the calendar year.
The Verdict
| Metric | MIIETF | MZNPETF |
|---|---|---|
| Real Cost (full TER) | Winner (~1.15%) | ~1.41% |
| Index Tracking | Winner (-11.8% gap) | -28.0% gap |
| Liquidity & Spreads | Winner (Higher volume) | Thinner volume |
| Diversification | Winner (30 Stocks) | 12 Stocks |
| Dividend History | Since 2024 | Winner (Since 2020) |
| Fund Size (AUM) | Smaller | Winner (Larger) |
| Institutional Backing | Mahaana Wealth | Winner (Al Meezan) |
If you can only own one: MIIETF. If you want to own both: 70% MIIETF / 30% MZNPETF.
Frequently Asked Questions
Is MIIETF or MZNPETF better for beginners? MIIETF. Lower unit price, tighter bid-ask spreads, and a simple 30-stock diversified basket make it the more forgiving first ETF for a new Shariah investor.
Does MZNPETF pay more dividends than MIIETF? MZNPETF has a longer dividend history since 2020 with more historical payouts. The per-unit yield in any year depends on what the underlying portfolio companies distribute - this varies and is not predictable for either fund. See the full Pakistan ETF dividend calendar for historical data.
Which ETF has lower tracking error - MIIETF or MZNPETF? MIIETF. Its 30-stock basket reduces per-stock rebalancing impact, resulting in a tighter lifetime tracking gap (-11.84% vs -28.07%). See the detailed tracking analysis on MIIETF and MZNPETF review pages.
Can I hold both MIIETF and MZNPETF in the same account? Yes. Both are PSX-listed and can be held in any CDC sub-account through any SECP-regulated broker. You buy and sell them exactly like individual stocks.
Is MII30 the same as KMI30? No. The MII30 (Mahaana Islamic Index) is a proprietary Mahaana Wealth index of 30 stocks. The KMI30 is the PSX/Al Meezan KSE Meezan Index of 30 stocks. Both draw from similar Shariah-screened universes but are separately constructed, resulting in different stock selections and weights.
Investment in ETFs carries market risk. Past performance is not a guarantee of future results. This comparison is for informational purposes only and does not constitute personalised investment advice. Data as of 2026-07-27.
This article is for educational and informational purposes only. It does not constitute investment advice. Always conduct your own due diligence and consult a qualified financial advisor before making any investment decisions. All data sourced from PSX, MUFAP, and fund factsheets. Past performance is not indicative of future results.
Dr. Faisal Shahzad
Chief Investment Strategist
Dr. Faisal Shahzad holds an MBA from Innsbruck, Austria, and has spent over a decade navigating complex financial markets. He specializes in Exchange Traded Funds (ETFs) and brings extensive, practical knowledge of both international markets and the Pakistan Stock Exchange (PSX).
Expertise: 15+ Years of experience in ETFs, both internationally and on the PSX.