A commissioner of Bangladesh Securities and Exchange Commission Sunday said mutual funds play an important role in the stock market. But in the last 10 years, mutual funds have failed to meet the investors' expectations.
Dr. Mizanur Rahman, commissioner of BSEC commented this while joining launching of "Sandhani AML SLIC Fixed Income Fund" --- first of its kind in Bangladesh on the day.
He said if the market falls, mutual funds underperform and cannot provide a steady return to the investors. In this context, Sandhani AML SLIC Fixed Income Fund may play a major role and provide the investor a healthy return with a minimal risk.
"Investors can withdraw their investments at any time and have the opportunity to take capital gains if any. I hope this will be an example to other fund managers," he said.
Sandhani Asset Management Ltd launched the unit fund.
This is the country's first no-dividend, open-ended fixed-income mutual fund, approved by BSEC, officials said.
Sandhani AML SLIC Fixed Income Fund aims to achieve long-term capital appreciation and shall not provide any dividend to its unit holders.
The initial target size of the fund is Tk 500 million. The sponsor of the fund --- Sandhani Life Insurance ---will provide Tk 100 million and the remaining Tk 400 million will be collected through sales of units of the fund.
The fund formally started its journey at a function at the Capital Market Journalists' Forum (CMJF) auditorium on Sunday and the subscription will continue until August 30. The face value per unit is Tk 10.
Tarique Amin Bhuiyan, managing director of the Dhaka Stock Exchange, and Richard D' Rozario, president of DSE Brokers Association of Bangladesh (DBA), were present as special guests.
Mr Tarique Amin said there is some discomfort in the capital market due to technology.
He hoped the Alternative Trading Board (ATB) would be operational by this September.
Currently, there are as many as 81 open-end mutual funds operating in the market, he said. He expected they would be able to bring them to the ATB by the end of September.
Mojibul Islam, chairman of Sandhani Life Insurance Company, Shaheduzzaman Choudhury, chairman of Sandhani Asset Management, Mir Ariful Islam, managing director & CEO of the Sandhani Asset Management, Anisuzzaman Chowdhury, financial consultant of Bangladesh General Insurance Company, spoke at the event.
The size of the fund will be increased from time to time since it has a perpetual life. Minimum purchase amount for individual investors is 500 units and for institutional investors are 5000 units.
Bangladesh General Insurance Company Ltd is working as trustee while Brac Bank Ltd is the custodian of the mutual fund.
Open-end mutual funds are not listed with the stock market but one can buy them from a fund managers' office on the basis of its net asset value. Similarly, investors can sell-off fund units at any time at prices based on its current net asset value.
The fixed-income mutual fund is more secure than traditional equity-based mutual funds.
The fund manager - Sandhani Asset Management --- aims to generate return through investments mostly in a range of fixed income securities such as government securities, investment grade corporate bonds and money market instruments, according to its prospectus.
Sandhani Asset Management is a subsidiary company of Sandhani Life Insurance Company, a listed company with DSE and Chittagong Stock Exchange.
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