10 declare no dividend for investors
The performance of mutual funds in the just concluded fiscal year witnessed significant fall as majority of those failed to declare dividend or announced lower dividends than last year.
A mutual fund is a type of professionally-managed scheme that pools money from many investors and is supposed to invest in stocks on behalf of them.
According to the declarations made by 29 mutual funds in Dhaka Stock Exchange in last few days, 10 declared no dividends and six declared lower dividend than last year.
Only the 12 mutual funds managed by the state-run Investment Corporation of Bangladesh declared higher dividends than last year.
One mutual fund that declared dividend started its operation last year.
Experts and market operators said the excess number of funds, incompetence of the fund managers and bulk investment of one mutual fund in another were the key reasons for the disaster in the mutual funds sector.
Besides, the net asset value of each unit of most of the funds came down below their offered price of Tk 10 as the shares the funds bought fell heavily because of prolonged depression in the capital market.
‘After the market crash in 2011 and the prolong depression everyone suffered in the stock market, the mutual funds seem to have gone a little overboard than expected,’ former Securities and Exchange Commission chairman Faruque Ahmed Siddiqui told New Age.
‘General investors expect that mutual funds will secure their investment as those are managed by professionals. But the competence of our fund managers is not up to the mark,’ he said.
The 10 funds that failed to declare any dividend are : First Janata Bank Mutual Fund, AB Bank 1st Mutual Fund, EBL NRB Mutual Fund, Green Delta Mutual Fund, ICB AMCL Third NRB Mutual Fund, IFIL Islamic Mutual Fund-1, NLI First Mutual Fund, PHP First Mutual Fund, Popular Life First Mutual Fund and DBH First Mutual Fund.
The six funds that declared lower dividend than last year are : ICB AMCL Second Mutual Fund, ICB Employees Provident MF 1 : Scheme 1, IFIC Bank 1st Mutual Fund, Prime Bank 1st ICB AMCL Mutual Fund, Trust Bank 1st Mutual Fund and EBL First Mutual Fund.
The 12 funds that declared higher dividends are : 1st ICB MF, 2nd ICB MF, 3rd ICB MF, 4th ICB MF, 5th ICB MF, 6th ICB MF, 7th ICB MF, 8th ICB MF, ICB AMCL 1st MF, ICB AMCL 2nd NRB Mutual Fund, ICB AMCL Islamic Mutual Fund and ICB AMCL 1st NRB Mutual Fund.
Southeast Bank 1st Mutual Fund declared 11 per cent cash dividend that started its operation last year.
Faruque Ahmed said that the fund mangers need to enhance their skills and behave more professionally.
He also said rules can be changed to make mutual funds investment more flexible to increase their scope of serving their unit holders.
‘To develop a capital market you need to have a solid base of institutional investors. So, we need to think for long-term and design the institutional investment sectors like mutual funds accordingly.
In 2011, seven mutual funds were launched and majority of those funds realised their public subscriptions with the help of other mutual funds.
According to the IPO results, last year four mutual funds were offered to public units worth Tk 327.50 crore of which Tk 109.54 crore was subscribed by several schemes of other mutual funds or by own mutual funds of the same asset manager.
‘The practice was not decent and that was a major reason for the mutual funds performing badly in recent times,’ said AIMS Bangladesh managing directors Yawer Sayeed.
Sayeed also admitted the lack of competence of the fund mangers.
‘It’s unfortunate. But the fund managers are yet to achieve the level of professionalism people expect from them,’ he said.
He said that in last one-and-a-half years the market is going through a depression and the number of funds increased rapidly.
-With New Age input
