Listed mutual funds performed poorly in the just concluded year (2018) as the sector registered a portfolio loss of 16.4 per cent in the year, whereas the market dropped by 13.75 per cent.
The total net asset value of closed-end mutual funds was Tk 5,718.53 crore in December, 2018, which was Tk 6,840.29 crore in December, 2017, according to a LankaBangla Finance market research.
Among the fund managers, Vanguard posted highest drop in portfolio returns in the year losing 17.7 per cent, followed by VIPB 17.7 per cent, ICB AMC 17.7 per cent, LR Global 12.8 per cent, RACE 11.5 per cent, ATC 11.0 per cent and AIMS 8.1 per cent in the year of 2018, it showed.
A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities.
The market was largely bearish in 2018, plummeting by 13.75 per cent. The bear run eroded share prices of most of the companies.
As mutual funds invest mostly in the capital market, the asset managers barely could make profits from the market in last year, market operators said.
A number of issues including woes in the country’s financial sector, local currency depreciation against the US dollar and political uncertainty in the election year made local and foreign investors exit from the stock market to avoid risk, said LankaBangla.
The daily average turnover at Dhaka Stock Exchange plunged by 37.46 per cent to Tk 551.09 crore in 2018 compared with that of Tk 872.67 crore in the previous year.
Investors showed a little interest in trading units of the mutual funds in 2018 as the total turnover of the industry dropped by 72 per cent to Tk 1,003.99 crore compared with that in the previous year.
Market operators said investors lost their appetite for mutual funds as the asset managers in the country were not well capable to make good profits.
Of the 35 mutual funds, 30 have been traded far below their units’ face value for years.
To make the matter worse, market regulator Bangladesh Securities and Exchange Commission has permitted to extend the tenure of mutual funds by 10 years more that drew flakes from the stakeholders. The unit holders now will have to wait another 10 years to get their capital and returns.
The mutual funds also did not provide lucrative dividends last year.
The asset managers provided 32 per cent less cash dividends compared with that in the previous year. The amount of cash dividend distributed in the year of 2018 was Tk 163.37 crore, which was Tk 243.3 crore in the previous year.
Among the fund managers, SEML was the top performer being the only one with positive portfolio return as net asset value of funds managed by SEML increased by 0.2 per cent.
Among the asset managers, the top asset manager in terms of asset under management is RACE which has 55.8 per cent market share in the industry. LR Global, AIMS, ICB AMCL, Vanguard, VIPB, SEML, ATCP, and CAPM are also key asset managers.
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