P/E ratio, good governance & future projection key to investment decisions

Investors should consider professionalism, experience and previous records of fund managers while investing in mutual funds, said the CEO of ICB Asset Management Company Ltd (ICB AMCL).
ICB AMCL has been ensuring good returns for unit holders through prudent investment decisions, said Mahmuda Akhter, chief executive officer, in an interview with the FE.
ICB AMCL, a subsidiary of the state-run Investment Corporation of Bangladesh (ICB), manages 10 closed-end and 15 open-end MFs. The ICB was the pioneer in the country's MF industry.
The annualised returns over the last five years of listed MFs under ICB AMCL were among the highest, as seen in data provided by Shanta Asset Management Limited.
ICB AMCL has the record of sacrificing its management fees for the sake of unit holders, said Ms Akhter.
The assets of closed-end MFs under the management of ICB AMCL were worth Tk 8.0 billion whereas the assets under open-end MFs were worth Tk 33.50 billion at the end of 2022.
Ms Akhter said their closed-end MF -- ICB AMCL CMSF Golden Jubilee Mutual Fund -- was floated just three months before the year end.
"We distributed a small amount of dividends to unit holders just three months after the launching of the fund. It would not be a violation of rules if no dividend was paid out for the period."
ICB AMCL distributed cash dividends at a rate of 5 per cent to 11 per cent for 12 December-closing funds.
"ICB AMCL did it for the sake of investors only," Ms Akhter said.
To keep investors' faith up, the fund manager distributed dividends to unit holders of open-end funds even taking support from reserves, she said.
As per the existing rules, the fund managers are to inject at least 60 per cent of a mutual fund into listed securities.
The funds, managed by ICB AMCL, have 70 per cent to 90 per cent invested in listed securities.
ICB AMCL has planned to expand investments in non-listed instruments, such as FDR (Fixed Deposit Receipt), up to 40 per cent.
Akhter said it was quite difficult to offload listed assets for diverting funds to fixed-income securities.
The returns of the ICB AMCL's MFs are much higher than that of the capital market.
How was it possible to ensure good returns when the market remained volatile?
"It's very tough to generate returns from a volatile market. But our portfolios are comprised of good securities which ensure returns for the MFs," said Ms Akhter.
ICB AMCL considers P/E (price earnings) ratios, good governance, price valuation and future projection of listed companies when injecting funds, she said.
The companies having good fundamentals remained stuck at the floor prices for long.
Asked if ICB AMCL will face any difficulty in distributing dividends as a significant portion of their funds got stuck with the companies traded at floor prices, she said the fund manager had the financial ability to overcome the situation.
"We are not worried about it. But the unit holders, who prefer long-term investments, will get good returns from investments in such companies."
The CEO of ICB AMCL said the MFs could ensure higher returns if there was the scope of product diversification, meaning more good stocks.
Ms Akhter laid importance on more publicity and policy support to help mutual funds regain investors' confidence.

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