The Bangladesh Securities and Exchange Commission is likely to amend the Mutual Fund Rules-2001 again waiving a condition which made 60 per cent investment in the stock market mandatory for the mutual funds, a senior official of BSEC said. The capital market regulator took the move in a bid to shape the mutual fund rules as like those in the developed countries’ markets and to allow the asset management firms of the mutual funds more flexibility to make their funds attractive, he said.
After the amendment, the asset managers of the mutual funds would be able to invest their funds wherever they want, the BSEC official said.
The commission is working to prepare a draft amendment in this regard. Once drafted, it will be published for stakeholders’ opinion before finalising, he said.
Presently 41 mutual funds are listed with the Dhaka Stock Exchange.
A mutual fund is a type of professionally-managed scheme which pools money from many investors and is supposed to invest money in stocks, bond, money market instruments and similar assets on behalf of the investors.
‘Mutual funds in our country were introduced in a bid to support the stock market. In that sense, it would be early to waive a condition which made 60 per cent investment of the funds mandatory in the stock market,’ BSEC former chairman Faruq Ahmed Siddiqi told New Age.
‘I think lowering the limit would be better than waiving the condition fully. But a draft rule for opinion is required to make final comment on such issue,’ he added.
The mutual funds of the country have been suffering severely from the stock market crash in 2010-2011 as asset management firms had invested like the retail investors before the bubble-burst, another BSEC official said.
Due to the prevailing poor conditions of the mutual funds listed with the capital market, more than 20 mutual funds refrained from starting the process to launch their funds even after getting green signal from the commission, he said.
Most of the funds also failed to fulfill their main duty to offer more attractive dividends compared with banks’ deposit interest. If mutual funds pay fewer dividends than the banks, there is no reason to invest in such instrument, he said.
The BSEC in 2013 amended the Mutual Fund Rules-2001 twice.
The present commission headed by M Khairul Hossain for the first time on January 8, 2013 amended the mutual fund rules lowering the mandatory investment limit of mutual funds in stocks to 60 per cent from 75 per cent.
-With New Age input
