MFs below face value, NAV

The market prices of more than 75 per cent listed mutual funds (MFs) are being traded below face value over last two years despite the regulatory move to make the MFs attractive to investors.

The maximum MFs are also being traded below their respective net asset value (NAV) reflecting the indication of investors' less interest to the funds.  

The market experts have said the MFs are yet to be attractive due to their poor returns and the overall market situation is also a reason behind their poor performance.

The dire state of the listed MFs has been found going through their price trend observed from early January, 2012 to the end of 2013.

The Bangladesh Securities and Exchange Commission (BSEC) brought an amendment at the end September, 2012 by incorporating the provision of re-investment amid the criticisms of market experts.

The securities regulator also eased the investment thresholds by the MFs by lowering the quota of making investments in listed securities from the 75 per cent to 60 per cent.

The regulator reduced the investment ceiling in listed securities in a bid to offer the flexibility for boosting the MFs' profits outside the capital market due to continuous declining trend of the capital market.

Out of 41 MFs, 31 were traded below their uniform face value of Tk 10 on January 7 (Tuesday).

On the day, 1st Janata Bank was traded at Tk 6.0 whereas the AB Bank 1st at Tk 7.0, AIBL 1st Islamic at Tk 7.0, DBH 1st at Tk 5.6, EBL 1st at Tk 7.1, EBL NRB at Tk 8.3, Exim Bank 1st at Tk 7.7, Green Delta at Tk 5.3, ICB AMCL 2nd NRB at 9.7 and ICB AMCL 3rd NRB at Tk 5.2.

The other MFs which were traded below face value on Tuesday are: ICB AMCL 2nd NRB, ICB AMCL Employees Provident, ICB AMCL Sonali Bank 1st, IFIC Bank 1st, IFIL Islamic, LR Global Bangladesh One, MBL 1st, NCC Bank MF-1, NLI 1st, Phoenix Finance 1st, PHP 1st, Popular Life 1st, Prime Bank 1st ICB AMCL, Reliance One, Southeast Bank 1st and Trust Bank 1st.

The price trend of the 1st Janata Bank MF reveals that the fund was traded at 9.25 in early January, 2012, whereas AB Bank 1st at Tk 10.1, AIBL 1st Islamic at Tk 8.0, DBH 1st at Tk 5.56, EBL 1st at Tk 10.30, EBL NRB at Tk 9.70, Green Delta at Tk 7.0, ICB AMCL 2nd NRB at 14.90 and ICB AMCL 3rd NRB at Tk 7.8.

The other MFs, whose market prices are below face value were also traded at a price ranging from Tk 6.5 to Tk 10.50 in early January, 2012.

Some of the MFs observed a little hike in September, 2012 and afterwards went down and are yet to go beyond their face values.

Yawer Sayeed, managing director & CEO of AIMS of Bangladesh, said the successive loss of the MFs is a reason behind the stagnant situation of the sector.

 "First of all, maximum MFs were not able to disburse satisfactory dividends due to successive loss. Secondly, the overall market situation is also a reason the unchanged situation of the sector," Mr. Sayeed said.