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Management fees of mutual funds to be fixed based on performance: BSEC
Bangladesh Securities and Exchange Commission (BSEC) is set to introduce a new provision for determining the management fees of mutual funds very soon.
According to the most recent provision, the management fees for managing mutual funds will be determined based on the efficiency and performance of the fund managers or asset management companies.
The process for the introduction of the new provision has almost been completed and it will be published through a gazette notification soon, BSEC Chairman Prof. Shibli Rubayat Ul Islam said while speaking at a roundtable on the capital market on Saturday.
An MF is a financial vehicle that pools assets from shareholders to invest in securities like stocks, bonds, money market instruments, and other assets. It is managed by professional fund managers and its portfolio is structured and maintained to match the investment objectives stated in its prospectus.
The regulatory move to fix management fees based on the performance of the fund managers came in the backdrop of a long-standing demand for the introduction of time-befitting regulations for the MFs.
The poor performance of the fund managers has been blamed for the lack of investor confidence in the mutual funds.
The size of assets under management (AUM) in Bangladesh is very insignificant, compared to India and Pakistan, although the number of asset management companies (AMCs) in Bangladesh is higher than in those two countries.
There are 43 AMCs in India and the size of its AUM is $472 billion while Pakistan has 21 AMCs and the size of its AUM is $6.36 billion as of July 2022.
On the other hand, there are 54 AMCs in Bangladesh and the size of its AUM is $1.60 billion only.
In his speech, BSEC chairman Prof. Shibli Rubayat said the recent growth trend of the MFs is well and they have started disbursing dividends.
“We call the fund managers when they fail to distribute dividends. We ask them for the reasons behind distributing fewer dividends. We also want to know whether the management is weak or not,” he told the roundtable held in a city hotel.
He also said investors having no investment literacy should not invest in mutual funds.
BSEC commissioner said an amendment to the regulations for the mutual funds will bring about a massive change.
“Apart from the management fees, many other changes will be included in the new provision,” said Mr. Rahman, also the chief of the BSEC MF department.
Asked about the insignificant amount of AUM in Bangladesh, he said the situation will improve gradually.
Managing Director of IDLC Investments Md Moniruzzaman said the mutual fund is one of the most popular investment vehicles in developed countries due to investor confidence in such funds and fund managers.
“But Bangladesh is lagging way behind even its neighbor, India, in terms of the size of the mutual fund industry relative to the economy,” he said.
In the USA, the size of the industry is bigger than the economy itself, Moniruzzman said.
Prior, the experts were critical of the regulatory decisions with regard to the extension of the tenures of the closed-end mutual funds and issuance of re-investment units (RIU).
They said the AMCs are benefitted only through RIU as their management fees are increased through the RIU.
The previous commission allowed the AMCs to extend the tenures of the closed-end mutual funds.
The then commission, however, said it took the decision in step with the suggestion of the government.
Currently, there are 36 closed-end mutual funds listed on the stock exchanges.
On the other hand, the number of open-end mutual funds is 84, according to the BSEC data.
Dhaka Stock Exchange DSE, Bourse on the third working day of the week, December 5, ended with price Index hikes & turnover drops. This information is known from DSE sources.
460 crore shares were traded on this day. 31 crore 78 lakh less trading was done in DSE today compared to the previous workday, 4 December, Shares worth Tk 491 crores 78 lakh shares were traded last time, Monday.
The benchmark DSEX added 3.16 points or 6,247 The Shariah-based index DSES gained 1.79 points or 1,359, and the blue-chip index DS30 decreased by 0.65 points or 2,113.
Of the issues traded, 60 advanced, 94 declined and 170 remained unchanged.
Capitec Grameen Bank Growth Fund ranked top gainer on DSE, the share price increased by Tk 1.10 paisa or 10.00 percent. On this day, the share was last traded at Tk 12.10 paisa.
GQ Ball Pen Industries Limited ranked top loser on the DSE, the share price dropped by Tk 13.20 paisa or 7.51 percent. On this day, the share was last traded at Tk 162.60 paisa.
DSE topped on trade is Central Pharmaceuticals Limited 25 crore 58 lakh takas of shares of the company have been traded.
A total of 62 companies’ shares were traded in the Block on the Dhaka Stock Exchange, 41 lakh 30 thousand 415 shares of the companies were traded. The financial value of which is 18 crore 12 lakh taka.
Dhaka Stock Exchange DSE, Bourse on the second working day of the week, December 4, ended with price Index & turnover hikes. This information is known from DSE sources.
491 crore 78 lakh shares were traded on this day. 142 crore 77 lakh more trading was done in DSE today compared to the previous workday, 30 November, Shares worth Tk 349 crores 1 lakh shares were traded last time, Sunday.
The benchmark DSEX added 12.45 points or 6,244 The Shariah-based index DSES gained 1.92 points or 1,357, and the blue-chip index DS30 increased by 5.69 points or 2,114.
Of the issues traded, 107 advanced, 49 declined and 169 remained unchanged.
Bangladesh Autocars Limited ranked top gainer on DSE, the share price increased by Tk 13.10 paisa or 9.95 percent. On this day, the share was last traded at Tk 144.70 paisa.
Jute Spinners Limited ranked top loser on the DSE, the share price dropped by Tk 13.50 paisa or 4.13 percent. On this day, the share was last traded at Tk 313.10 paisa.
DSE topped on trade is Khulna Printing and Packaging Limited 27 crore 24 lakh takas of shares of the company have been traded.
A total of 54 companies’ shares were traded in the Block on the Dhaka Stock Exchange, 37 lakh 64 thousand 536 shares of the companies were traded. The financial value of which is 28 crore taka.
The Bangladesh Securities and Exchange Commission (BSEC) has undergone significant restructuring, bringing about substantial changes in the responsibilities of officials from commissioners to assistant directors. According to BSEC sources, this restructuring involves the reassignment of two commissioners, four executive directors, eight directors, two additional directors, and eight assistant directors to different departments.
As per BSEC, Professor Dr. Sheikh Shamsuddin Ahmed, the Commissioner has been assigned the responsibility of the Division of Issuer Companies Affairs, Corporate Finance, and Financial Literacy Division within the Market and Intermediaries Affairs Division. On the other hand, the Chief Accountant Division’s responsibility has been given to another BSEC Commissioner, M. Abdul Halim.
Additionally, Abdul Halim has been entrusted with the Market Intelligence and Investigation Division and Derivatives Division. Meanwhile, he will also oversee the duties of the Chief Accountant Division. BSEC Chairman Professor Shibli Rubayat-Ul-Islam will directly oversee the Administration and Finance Division and the Commission’s Secretariat Division.
Mohammad Anwarul Islam, the Executive Director of BSEC, has been assigned the responsibilities of the Derivatives and Research and Development Divisions. Simultaneously, he will be responsible for the Investment Management Division. Executive Director Mohammad Rezaul Karim will oversee the responsibilities of the Compliance Division in addition to his existing role in the Legal Division. Executive Director Mohammad Shafiul Azam has been assigned to the Financial Literacy Division. Executive Director Mohammad Jahangir Alam has been given charge of the Market and Intermediaries Affairs Division. Besides, the responsibilities of eight directors, two additional directors and eight assistant directors of BSEC have been redistributed.
BSEC Secretary Division’s responsibilities have been assigned to Director General Muhammad Mahmudul Haque. Director General Pradip Kumar Basak will continue to oversee the responsibilities of the Administration and Finance Division, with additional duties in the Accounts and Finance Department. Director General Mohammad Abul Kalam will manage the responsibilities of the Division of Issuer Companies Affairs, alongside his role as the Chief Accountant of the Division. Director General Md. Mansoor Rahman has been assigned the responsibility of the existing Issuer Company Affairs Division as well as the Market and Intermediaries Affairs Division. Director Mohammad Abul Hasan has been given the responsibility of the Investment Management Division and Derivatives Division.
The Division of Derivatives and the Derivatives Division will be led by Director General Sheikh Mahbubur Rahman. Furthermore, Director General Abu Rayhan Mohammad Mutasim will be in charge of the Internal Audit and Compliance Division, in addition to his role in the Research and Development Division. Director General Mohammad Fakhrul Islam Mojumdar will assume responsibilities for the Corporate Finance Division and the Enforcement Division. Lastly, Director General Mohammad Fakhrul Islam Majumder will head the Corporate Finance Division and the Enforcement Division.
