Mutual fund units in demand on hopes of reforms
Investors rushed to mutual funds in the last few days on growing hopes that the new commission would take reform initiatives to protect the interest of the unitholders.
Their enthusiasm came although the market is yet to overcome the uncertainty caused by the coronavirus pandemic.
The DSEX, the benchmark index of the Dhaka Stock Exchange, dropped 19 points, or 0.30 per cent, to 4,963 yesterday. Turnover, an important indicator of the market, rose 7.12 per cent to Tk 914 crore.
Mutual funds were among the top gainers in the last few days. Mutual funds are investment tools that gather a fixed pool of money from many investors and re-invest them into stocks, bonds and other assets.
EBL First Mutual Fund topped the pack of gainers yesterday after it rose 10 per cent.
CAPM IBBL Islamic Mutual Fund, SEML Lecture Equity Fund, Janata Bank First Mutual fund, Popular Life First Mutual Fund, Prime Bank First Mutual Fund, PHP First Mutual Fund, and VAML LR Fund also advanced significantly.
Initiatives taken by the Bangladesh Securities Exchange Commission (BSEC), led by its Chairman Prof Shibli Rubayat-Ul-Islam in recent times, has instilled confidence into investors.
Investors now hope that the regulator would continue its reform momentum and would do something for the mutual funds. This optimism attracted investors to pour money into the units, said a top official of a merchant bank.
An official of the commission said the regulator is working on mutual fund units. The BSEC has not disclosed any plans officially yet.
One of the initiatives could see that the regulator would refuse to extend the tenure of closed-end mutual funds unless they receive approval from unitholders, he said.
Closed-end mutual funds are investment vehicles that gather a fixed pool of money for 10 years from investors and re-invest them into stocks, bonds and other assets. After 10 years, they are supposed to be liquidated and the value of the funds distributed among unitholders.
But on September 16 last year, following calls from some asset management companies, the BSEC extended the tenure of the closed-end mutual funds by another 10 years.
Subsequently, LR Global Bangladesh Asset Management Company extended the tenure of six of its closed-end mutual funds by a decade. Race Asset Management extended the tenure for 10 of its funds.
The BSEC's decision came under criticism.
There are 37 listed mutual funds. Of them, five are trading above their face-value and the rest below the face-value.
Paramount Textile topped the turnover list yesterday after its shares worth Tk 50 crore changed hands, followed by Beximco Ltd, Sandhani Life Insurance, Asia Pacific Insurance, Beximco Pharmaceuticals, Brac Bank, Pioneer Insurance, BD Finance, Republic Insurance and Nitol Insurance.
GQ Ball Pen shed the most, giving up 8.36 per cent, followed by United Airways, Asia Pacific Insurance, Tung Hai Knitting, KBB Power, Provati Insurance, Paramount Insurance, Premier Insurance, Bangladesh Industrial Finance Company, and Appollo Ispat.
Comments