The share of the aggregate value of mutual funds (MFs) in the total market capitalisation of listed issues in Bangladesh is the lowest among nine selected Asian countries.
The net asset value (NAV) of the listed closed-end MFs managed in Bangladesh being a meagre USD 1.52 billion was equivalent to only 1.48 per cent of market capitalisation in 2013.
The consolidated NAV of the country's listed MFs was 3.50 per cent of total market capitalisation calculated as of September 30, 2014.
An academic paper, which was presented Saturday by the commissioner of the securities regulator Prof Md. Helal Uddin Nizami at a training session held at the Bangladesh Institute of Capital Market (BICM), highlighted the scenario of MFs.
The training session was attended by assistant secretaries, senior assistant secretaries, deputy secretaries, joint secretaries, additional secretaries and secretary of the Bank and Financial Institutions Division (BFID) of the ministry of finance, among others.
According to the paper of Commissioner Nizami, the share of the MFs in the total value of listed issues (market capitalisation) was 44.00 in Hong Kong in 2013.
The same in the case of Korea was 25.21 per cent, India 11.73 per cent, Pakistan 6.42 per cent, Malaysia 19.71 per cent, China 19.72, Japan 17.07 per cent and Singapore 4.04 per cent in 2013.
When contacted, commissioner of the Bangladesh Securities and Exchange Commission (BSEC) Mr. Nizami said the ratio of market capitalisation and NAV of MFs is not yet satisfactory in Bangladesh as investors are still not aware of the instruments available for safe investment.
"At the same time, the performance of Asset Management Companies (AMCs) are yet to be up to the mark. But we are optimistic as many irregularities of MFs have already come under the scanner of the securities regulator along with investment friendly changes made in securities rules," Mr. Nizami said.
Presently, there are 41 closed-end MFs listed with both the bourses. Total size of such 41 MFs at market price is above Tk 50.64 billion as of October 30, 2014.
On the other hand, there are nine non-listed open-ended MFs having an aggregate size of above Tk 67.90 billion calculated at market price as of October 30, 2014.
Among the closed-end ones, ICB Unit Fund has a size above Tk 43.61 billion, ICB AMCL Unit Fund above Tk 4.87 billion and Bangladesh Fund above Tk 17.49 billion.
In his paper, BSEC Commissioner focused on recent changes in rules of MF to make the industry vibrant.
The changes include: reduction of MFs' investment into capital market to boost the returns, introduction of re-investment concept of dividend distribution to increase the strength of the funds, introduction of Fixed Income Securities to widen investment option of MFs, introduction of Special Purpose Fund to create the scope of infrastructure fund, introduction of Collective Investment Scheme to create Exchange Traded Fund (ETF) and Real Estate Investment Trust, introduction of Individual Selling Agent to promote open-ended MF and introduction of Conversion Process to create scope for conversion of closed-end MFs to open-ended ones.
He said to ensure compliance of AMCs, the securities regulator prohibited the investment of funds under same AMC and set the provision of bank account opening as per due approval of Trustee.
mufazzal.fe@gmail.com