The mutual fund sector at the capital market was passing through a tough time as profits of most of the funds declined in the last quarter (January-March) compared to that in the same quarter of the previous year due to a prolonged downtrend in the market amid political turmoil. An MF is one type of professionally-managed scheme which pools money from many investors and is supposed to invest money in stocks on behalf of the investors.
According to Dhaka Stock Exchange data, of the 41 mutual funds, 32 disclosed January-March quarter report which showed that profit of 19 mutual funds dropped in January-March period compared to that in the same period of the last year while 13 mutual funds managed to get increased profits.
Market experts said along with the long-lasting depression at the stock market, policy restriction and incompetence of the fund managers were the major reasons for the disaster of the mutual fund sector.
As market movement always affects the mutual funds, the prolonged downtrend in the market took its toll on the mutual fund sector, they said.
After the crash in the stock market in 2010-2011, investors of mutual funds were the worst sufferers as the prices of the units of most of the mutual funds are now trading under the net asset value of the funds.
The NAV of the most MFs against each unit came down to below its face value of Tk 10. The DSE data also showed that 24 of the 41 MFs are now trading between Tk 4 to Tk 9, which is under the face value.
However, unit prices of the mutual funds increased recently after the Bangladesh Securities and Exchange Commission’s amendment to the Mutual Fund Regulations-2001 allowing issuance of stock dividends by the mutual funds for their unit holders.
In January-March, profit of First ICB Mutual Fund declined to Tk 1.02 crore from Tk 1.27 crore in the same period last year, that of Prime Finance First Mutual Fund to Tk 0.12 crore from Tk 0.43 crore and that of ICB AMCL First Mutual Fund to Tk 1.86 crore from Tk 7.34 crore.
However, profit of First Janata Mutual Fund increased to Tk 2.74 crore from Tk 1.58 crore, First BSRS Mutual Fund to Tk 0.14 crore from Tk 0.06 crore, Second ICB Mutual Fund to Tk 0.34 crore from Tk 0.20 crore, Third ICB Mutual Fund to Tk 0.64 crore from Tk 0.51 crore, PHP First Mutual Fund to Tk 2.32 crore from Tk 1.14 crore.
Following the debacle in the capital market, of the 41 listed mutual funds, profits of 22 MFs dropped in July-December, 2012 compared to that in the same period of the previous year.
Only 12 mutual funds managed to get increased profits while four other MFs offset their losses in the period.
In the previous year, more than 10 mutual funds failed to declare any dividend for their unit holders due to the prolonged downtrend in the market.
-With New Age input
