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The country's first ever open-end mutual fund will hit bourses early next year, expanding the orbit of stock market and providing share holders a very useful and convenient investing vehicle.
Prime Finance Asset Management Company Limited (PFAMCL) would float the mutual fund, with initial size of Tk500 million, in the first quarter of 2010, company officials said Saturday.
Securities regulater said it will be the first open-end mutual fund in Bangladesh's stock market history, as all 18 mutual funds now operating in the bourses are closed-end.
"Our rules allow launching of open-end mutual fund in the capital market," Securities and Exchange Commission chairman Md Ziaul Haque Khondker told the FE.
"If everything goes in line with the securities rules, Prime Finance's fund would be the first such kind to be listed with the stock exchanges," he added.
Mutual fund, which enable investors to pool their money and place it under professional investment management, are mainly of two types: closed and open-end.
While a closed-end fund offers only limited number of shares and puts the brake on issuing no new units after it is launched, open-end does not have any curbs on the amount of shares to be issued.
If demand is high enough, the fund will continue to issue shares no matter how many investors there are. Open-end funds also buy back shares when investors wish to sell.
The majority of the mutual funds now available in the world are open-end. By continuously selling and buying back fund shares, these funds provide investors with a very useful and convenient investing tool.
Company officials said initial size of the Prime Finance First NRB (Non-Resident Bangladeshi) Unit Fund might be increased depending on the demand and approval of the SEC.
Some 60 per cent of the Tk500 million fund will be sold to public and 20 per cent each for sponsors and private placement. Face value of each unit will be Tk 100.
State-owned Investment Corporation of Bangladesh (ICB) will act as trustee and custodian of the fund.
Akter H Sannamat, managing director of the Prime Finance and Investment Limited (PFIL), the sponsor of the fund, said they are confident that the country's first open-end mutual fund would be popular and a success.
"The size and number of the open-end mutual fund is increasing day by day across the world. It's a very popular investing tool. It was launched in China in 2004 and has proved to be a big success," he said.
PFAMCL, also an offshoot of the PFIL that is launching the fund, said the SEC has already agreed in principle to approve the fund.
"Objective of the fund is to tap into remittance of non-resident Bangladeshis. It will ensure long term returns," Moin Al-Kashem, PFAMCL managing director and chief executive officer said.
He said the investors who'll purchase units either through private placement or public offer or subsequent purchase from the asset management company will have option to receive their units in demated form to be deposited in their BO (Beneficiary Owner) accounts.
All the demated units of the fund to be sold through private placement and public offer will be listed with the stock exchange after completion of public offer.
The units with demat option subsequently purchased will also be listed with the stock exchange every third day of week.
The transaction of the units in the stock exchange will be done just like any other securities listed with the stock exchanges. |
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