Mutual funds have failed to attract investors’ attention much despite better performance by them in terms of offering dividends to their unit holders in 2014.
Due to the investors’ less attention, most of the mutual funds witnessed decline in their unit prices after dividend declaration and are being traded below their net asset value per unit.
Out of the 41 mutual funds listed with the Dhaka and Chittagong stock exchanges, 38 have so far declared dividends for their unit holders, the rest three are yet to complete their financial year.
As per the dividends offered by the trustees of 38 mutual funds, 29 funds have declared better dividends for their unit holders for the year ended on June 30, 2014 compared with that of the same period of the previous year.
Four mutual funds declared decreased dividends and five funds managed to declare same dividends in 2014 compared with the dividends the entities declared in 2013.
As per the data of 2013, 13 mutual funds out of 41 listed with Dhaka Stock Exchange had failed to issue any dividend to their unit holders in last year.
Out of the 26 mutual funds that issued dividends for their unit holders in last year, 10 issued around 2.50 per cent to 10 per cent re-investment units or stock dividends for their unit holders.
In 2014, almost all the mutual funds have failed to attract investors as they (investors) considered the dividends not lucrative, capital market experts said.
They said that most of the mutual funds used to declare less than 15 per cent dividends to their unit holders at the end of a year which was not expectable from any professional entity as investors could get the same amount of return from deposits in banks.
‘Poor dividend declaration by the mutual funds is the key reason for investors’ less attention to the mutual funds,’ a Bangladesh Securities and Exchange Commission senior official told New Age.
He also said that once the mutual funds would prove that they were capable to offer at least a dividend around 25 per cent in a year that might help to attract investors’ attention to the funds.
The BSEC has recently strengthened its monitoring over the mutual funds in a bid to identify the lacking of asset management companies, if any, or any other inefficiency of the AMCs that may be responsible for the poor functioning of the mutual funds,’ the BSEC official said.
‘Improved dividend declaration by the most of the mutual funds is a good sign in terms of their previous year’s performance, but, the performances of the mutual funds are not up to the market,’ Yeawar Sayeed, managing director of Aims Bangladesh, an asset management company, told New Age.
Mutual funds are offering 10-12 per cent dividend to the investors which is not satisfactory to the investors as investors could get the same benefit from the banking system which is safer than the capital market instrument, he said.
Mismanagement and irrational behaviour of the issue managers are the main reasons for the poor situation of the mutual fund sector, he said.
‘Allowing mutual funds to issue stock dividends or re-investment is a wrong decision taken by the commission that has affected the mutual funds further as the net asset value of the MFs declines further after issuing bonus shares,’ said Yeawar.
The mutual funds which declared decreased dividends for their unit holders in 2014 are First Bangladesh Fixed Income Fund, IFIC Bank First Mutual Fund, EBL First Mutual Fund and Green Delta Mutual Fund.
First ICB Mutual Fund, Second ICB Mutual Fund, Third ICB Mutual Fund, Fourth ICB Mutual Fund, Fifth ICB Mutual Fund, Seventh ICB Mutual Fund, Eighth ICB Mutual Fund, Sixth ICB Mutual Fund, Aims First Mutual Fund, Grameen Mutual Fund One, ICB AMCL First NRB Mutual Fund, Grameen One : Scheme Two, First Janata Bank Mutual Fund, EXIM Bank First Mutual Fund, Popular Life First Mutual Fund, NLI First Mutual Fund, Southeast Bank First Mutual Fund, ‘Reliance One’ the 1st scheme of Reliance Insurance Mutual Fund, ICB AMCL Sonali Bank Limited First Mutual Fund, IFIL Islamic Mutual Fund-One, PHP First Mutual Fund, AIBL First Islamic Mutual Fund, ICB AMCL Third NRB Mutual Fund, ICB AMCL Second Mutual Fund, ICB Employees Provident MF One: Scheme One, Phoenix Finance First Mutual Fund, Prime Bank 1st ICB AMCL Mutual Fund, MBL 1st Mutual Fund and DBH First Mutual Fund are the mutual funds which declared increased dividends for their unit holders.
ICB AMCL Islamic Mutual Fund, AB Bank First Mutual Fund, EBL NRB Mutual Fund, ICB AMCL Second NRB Mutual Fund and Trust Bank First Mutual Fund offered same dividend as the previous year.
NCCBL Mutual Fund-One, Prime Finance First Mutual Fund and LR Global Bangladesh Mutual Fund One are the funds while will declare dividends after their year closing.
-With New Age input
