Pension, provident funds now free to float mutual funds
Monday, 22 December 2008
Kayes M Sohel
The government has published a gazette notification regarding 'mutual fund rules', allowing trusts, registered provident and pension funds to float mutual funds in the stock markets.
About a year back, the Securities and Exchange Commission (SEC) had amended the 'mutual fund rules' so that the sizeable trust, registered provident and pension funds, which mostly remains idle, can be invested in the form of mutual funds in the country's stock markets.
"The government has recently published the gazette notification related to the 'mutual fund rules' in a bid to allow the funds to be floated as mutual funds in the markets," said an official of the commission.
Under the revised rules, trusts, registered provident and pension funds have been made eligible for sponsoring mutual funds.
A company now will be able to retain 30 per cent of its profit, which was 20 per cent as per the previous rules, it says.
"Obviously, it's very good news for the stock market as it will help broaden the country's growing stock market," said Yawer Sayeed, a capital market analyst.
Moreover, it is a great leap forward for the local mutual fund industry, he said adding globally, pension and retirement funds are the major institutional investors, opening up the avenue for retirement funds, which will certainly strengthen the local capital market.
More mutual funds will be floated under the new arrangement in the stock market as the funds can play a significant role to minimise the risk of investors particularly small ones.
Some large foreign and local companies have already proposed to float their pension and retirement funds as mutual funds, said a source involved with stock market IPO floatation.
The country has now a substantial size of pension and retirement funds that could occupy the lion's share of the market's total market capitalisation, said Sayeed, also the managing director of AIMS of Bangladesh.
AIMS has already designed a retirement mutual fund for floating, he added.
Mutual funds in the neighbouring countries of Bangladesh account for over 30 to 40 per cent of the total market capitalisation of those countries while in Bangladesh, mutual funds contribute only three per cent of total capitalisation.
Currently, the market has a total of 16 mutual funds worth $ 207 million and the total issued capital of the all the mutual funds stands at $45 million.
The government has published a gazette notification regarding 'mutual fund rules', allowing trusts, registered provident and pension funds to float mutual funds in the stock markets.
About a year back, the Securities and Exchange Commission (SEC) had amended the 'mutual fund rules' so that the sizeable trust, registered provident and pension funds, which mostly remains idle, can be invested in the form of mutual funds in the country's stock markets.
"The government has recently published the gazette notification related to the 'mutual fund rules' in a bid to allow the funds to be floated as mutual funds in the markets," said an official of the commission.
Under the revised rules, trusts, registered provident and pension funds have been made eligible for sponsoring mutual funds.
A company now will be able to retain 30 per cent of its profit, which was 20 per cent as per the previous rules, it says.
"Obviously, it's very good news for the stock market as it will help broaden the country's growing stock market," said Yawer Sayeed, a capital market analyst.
Moreover, it is a great leap forward for the local mutual fund industry, he said adding globally, pension and retirement funds are the major institutional investors, opening up the avenue for retirement funds, which will certainly strengthen the local capital market.
More mutual funds will be floated under the new arrangement in the stock market as the funds can play a significant role to minimise the risk of investors particularly small ones.
Some large foreign and local companies have already proposed to float their pension and retirement funds as mutual funds, said a source involved with stock market IPO floatation.
The country has now a substantial size of pension and retirement funds that could occupy the lion's share of the market's total market capitalisation, said Sayeed, also the managing director of AIMS of Bangladesh.
AIMS has already designed a retirement mutual fund for floating, he added.
Mutual funds in the neighbouring countries of Bangladesh account for over 30 to 40 per cent of the total market capitalisation of those countries while in Bangladesh, mutual funds contribute only three per cent of total capitalisation.
Currently, the market has a total of 16 mutual funds worth $ 207 million and the total issued capital of the all the mutual funds stands at $45 million.