A prolonged depression in the country’s stock market continued to take its toll on the mutual fund sector as profits of majority of the funds decreased in the first half of the current fiscal year compared with those in the same period of the previous year.
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 DSE data, of the 41 listed mutual funds, profits of 22 MFs dropped in July-December, 2012 compared with those 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.
The net asset value of each unit of most of the funds came down below their offer price of Tk 10 as the prices of the shares the funds bought fell heavily because of the prolonged depression in the capital market.
Most of the mutual funds are being traded at the DSE at prices lower than their face value of Tk 10.
Market experts said the long-lasting depression in the stock market, policy restriction and incompetence of the fund managers were the major reasons for the disaster for the mutual fund sector.
‘The funds which are losing money were launched in and after 2010. These were launched with a mandatory 75 per cent stock market investment provision,’ Mahmood Osman Imam, who teaches finance at Dhaka University, told New Age.
He said as the market was going through a depression for the last two years, the portfolio erosion of the funds was inevitable due to their huge investment in the stock market.
‘The funds which are better off actually evaded the obligation and invested major portion of fund in the money market,’ he said.
He said that as the mutual funds could not diversify their investments, they had to bear the losses.
‘The new mutual fund rules, however, has addressed some of the issues including reducing mandatory investment to 60 per cent,’ he said.
He, however, criticised the Bangladesh Securities and Exchange Commission’s move to allow only the coming funds stock dividend.
‘It does not ensure a level playing field and the old funds have to suffer more because of this,’ he said.
In 2011 and 2012, eleven mutual funds were launched and majority of those funds realised their public subscriptions with the help of other mutual funds.
The MFs which made decreased profits in July-December are First Janata Bank Mutual Fund whose profit declined to Tk 3.97 crore from Tk 5.56 crore, First ICB Mutual Fund to Tk 0.84 crore from Tk 1.12 crore, Fourth ICB Mutual Fund to Tk 1.12 crore from Tk 1.12 crore, Sixth ICB Mutual Fund to Tk 1.44 crore from Tk 2 crore, Eighth ICB Mutual Fund to Tk 1.73 crore from
Tk 2.74 crore, EBL NRB Mutual Fund to Tk 3.86 crore from Tk 4.80 crore and EBL First Mutual Fund to Tk 3.19 crore from Tk 7.20 crore.
ICB AMCL First NRB Mutual Fund’s profit fell to Tk 1.67 crore from Tk 1.68, ICB AMCL Second NRB Mutual Fund to Tk 6.17 crore from Tk 13.14 crore, ICB AMCL Third NRB Mutual Fund to Tk 1.13 crore from Tk 2.20 crore, ICB AMCL Second Mutual Fund to Tk 0.78 crore from Tk 2.52 crore, ICB Employees Provident MF 1: Scheme 1 to Tk 0.90 crore from Tk 2.32 crore, ICB AMCL Islamic Mutual Fund to Tk 0.66 crore from Tk 0.75 crore, IFIC Bank First Mutual Fund to Tk 3.75 crore from Tk 4.26 crore, IFIL Islamic Mutual Fund-1 to Tk 0.66 crore from Tk 1.04 crore, Phoenix Finance First Mutual Fund to Tk 0.67 crore from Tk 2.27 crore, PHP First Mutual Fund to Tk 3.86 crore from Tk 4.06 crore, Popular Life First Mutual Fund to Tk 4.94 crore from Tk 5.22 crore, Prime Bank First ICB AMCL Mutual Fund to Tk 1.04 crore from Tk 2.33 crore, Reliance One the first scheme of Reliance Insurance Mutual Fund to Tk 2.18 crore from Tk 3.15 crore, Southeast Bank First Mutual
Fund to Tk 3.69 crore from Tk 4.94 crore and Trust Bank First Mutual Fund to Tk 4.93 crore from Tk 10.23 crore.
The MFs whose profits increased in the period are First Bangladesh Shilpa Rin Sangstha Mutual Fund whose profit advanced to Tk 3.07 crore from Tk 1.08 crore, Second ICB Mutual Fund to Tk 0.76 crore from Tk 0.71 crore, Third ICB Mutual Fund to Tk 1.11 crore from Tk 1 crore, Fifth ICB Mutual Fund to Tk 1.60 crore from Tk 1.53 crore, Seventh ICB Mutual Fund to Tk 1.98 crore from Tk 1.79 crore, AIBL First Islamic Mutual Fund to Tk 9.35 crore from Tk 4.23 crore, Grameen Mutual Fund One to Tk 2.68 crore from Tk 1.76 crore,
Grameen Mutual Fund Two to Tk 7.09 crore from Tk 4.83 crore and ICB AMCL First Mutual Fund to Tk 3.33 crore from Tk 2.79 crore.
NLI First Mutual Fund made a profit of Tk 2.56 crore, AB Bank First Mutual fund Tk 4.60 crore and First Bangladesh Fixed Income Fund Tk 20.79 in the first half of the accounting year.
The MFs which offset their losses in the period are AIBL First Islamic Mutual Fund whose loss decreased to Tk 2.27 crore from Tk 5.59 crore, DBH First Mutual Fund to Tk 1.70 crore from Tk 15.97 crore and Green Delta Mutual Fund to Tk 4.40 crore from Tk 20.47 crore in July-December, 2012.
NCCBL Mutual Fund One, Prime Finance First Mutual Fund and LR Global Bangladesh Mutual Fund One are yet to publish their financial reports for the period.
Courtesy of New Age