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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.
One of the Listed companies, National Polymer Limited has recommended 10.50% Cash Dividend for the year ended June 30, 2024.
It has reported Consolidated EPS of Tk 2.27 paisa, and Consolidated NAV per share of Tk 30.63 for the year ended March 31, 2024.
The Annual General Meeting (AGM) of the company will be held on December 18, through the digital platform. The record date for this has been fixed at October 22.
The Company also discloses its financial reports for the second quarter, (April – June 24).
As per the company’s consolidated life revenue account for April to June 2024, the excess of total income over total expenses, including claims (surplus), stood at Tk 1,394.24 million. This marks a significant increase from the surplus of Tk 823.68 million during the same period in 2023.
For the first half of 2024, from January to June, the company reported a surplus of Tk 2,177.57 million, compared to Tk 1,290.39 million in the corresponding period of the previous year.
Additionally, the Life Insurance Fund balance as of June 30, 2024, reached Tk 55,188.62 million, showing a net increase of Tk 5,892.25 million from Tk 49,296.37 million on June 30, 2023.
One of the Listed companies, Beacon Pharmaceuticals PLC has recommended 20% Cash dividend and 10% Cash Dividend to Sponsor Shareholder and Directors for the year ended June 30, 2024.
It has reported EPS of Tk 2.26 paisa, and NAV per share of Tk. 26.37 for the year ended June 30, 2024.
The Annual General Meeting (AGM) of the company will be held on December 23, through the digital platform. The record date for this has been fixed at October 27.
The Bangladesh Securities and Exchange Commission (BSEC) has removed three audit firms from its panel for their failure to secure enlistment with the Financial Reporting Council (FRC), according to a notice issued today.
The firms—A Hoque & Company, FAMES & R, and SK Barua & Company Chartered Accountants—were delisted following the FRC’s request. In December last year, the FRC published a list of enlisted audit firms and subsequently, in February, requested the BSEC to remove any firms that were not included on that list.
BSEC regulations mandate that financial statements signed by auditors outside its approved panel will not be accepted. With the removal of these three firms, the total number of audit firms on the BSEC panel has been reduced from 48 to 45.
Sources from the FRC revealed that 15-20 audit firms failed to secure enlistment last year, and approximately 45 chartered accountants are currently under restrictions imposed by the Institute of Chartered Accountants.
Although the delisted firms can no longer audit issuer companies or listed securities, they are allowed to complete audit and assurance services that were initiated before their removal, the BSEC clarified.
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