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Saturday, April 4, 2009

Mutual fund deluge this year

About a dozen close-end mutual funds, sponsored mostly by commercial banks and insurance companies, are expected to hit the stock markets within this calendar year.

A number of commercial banks such as Eastern Bank Ltd (EBL), Trust Bank Ltd (TBL) and IFIC Bank Ltd have already finalised the process of launching the close-end mutual funds (MFs), sources said.

The Financial Express

Non-banking financial institutions and nationalised commercial banks are also striving to float their own mutual funds, considered to be risk-free investment tools.

The 'IFIC First Mutual Fund' worth Tk 1.0 billion and 'TBL First Mutual Fund' worth Tk 2.0 billion are likely to enter the market by July next, a market source told the FE.

The EBL First Mutual Fund valued at Tk 1.0 billion is also expected to float IPO this month, he added.

RACE Asset Management Company will manage the close-end mutual funds, sponsored by EBL, IFIC, TBL. The state-owned Investment Corporation of Bangladesh (ICB) will act as custodian and trustee of the forthcoming mutual funds.

Of the total shares of all the mutual funds to be launched by EBL, IFIC and TBL, 60 per cent will be reserved for pre-IPO placement, 20 per cent for public and 20 per cent for sponsors, sources said. The per unit price of the mutual funds will be Tk 10.

Meanwhile, the Securities and Exchange Commission (SEC) has recently set up a separate wing to expedite the approval process of mutual funds.

Besides, mutual funds of Green Delta, Agrani and BGIC insurances, and IDLC Finance Ltd are in the pipe line.

The 'LR Global Bangladesh Mutual Fund One' worth Tk 3.0 billion is expected to come to the market by this or next month and another mutual fund valued at Tk 5.0 billion within this year, another source told the FE.

The two mutual funds will be the big ones in the country's stock markets after the Grameen One Scheme Two Mutual Fund worth Tk 1.25 billion that was listed in September last year.

The five private financial institutions -- IDLC Finance Limited, Lanka Bangla Finance Limited, AB Bank, Prime Bank and Trust Bank-- will jointly float the mutual funds worth Tk 3.0 billion, sources said.

Of the total amount, some Tk 1.5 billion will be set aside for pre-IPO placement, Tk 1.0 billion for public and Tk 0.5 billion for sponsors, sources said. The unit price of the mutual fund will be Tk 10.

The process of floating mutual fund amounting to Tk 5.0 billion, sponsored by ICB, Janata Bank, Sonali Bank, Agrani Bank and Sadharan Bima Corporation, is now in its nascent stage, another source said adding the state-owned financial institutions have agreed to jointly float the fund this year, which will be the biggest ever mutual fund in the bourses.

A capital market expert said, "Mutual funds are one of the vehicles for the growth of the stock markets and it will help broaden the depth of the market."

Professionally managed, innovative and quality mutual funds will meet the growing demand of investors in the market, he added.

Currently, a total of 16 mutual funds are listed with the bourses. Of them, ICB and its subsidiaries are managing 12 mutual funds, AIMS Bangladesh three and BSRS one.

Prime Finance First Mutual Fund has made its debut last month.

Mutual funds in the neighbouring countries of Bangladesh account for more than 40 per cent of the total market capitalization of those countries while in Bangladesh, mutual funds' share in the total market capitalization is only 3.0 per cent.



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