This is a comprehensive study on Managed Funds industry, the main purpose of this study was to examine the mutual fund industry of Pakistan, to examine the assets allocation pattern of mutual funds, how efficiently they are allocated into various asset categories and how investors base their future investment decisions either on past performance or on the basis of risk, size of fund, and availability of alternative investment schemes. The study covers period from September 2007 to December 2013 quarterly data on funds flow and past performance were used. This study uses panel regression model to test the relationship between past performance and returns. I would like to conclude this with the words of Morgan Stanley Dean Witter, "In the end, not all asset management (mutual fund) companies will survive, [but] for firms that have built a 'culture of excellence' over the years, have segmented their customers efficiently, built brand, and delivered performance, the ongoing opportunities to take market share have never been more significant."