Bangladesh Securities and Exchange Commission (BSEC) has finally approved the launch of its first Mutual Fund for a conversion of a close-ended fund into an open- ended fund after the completion of its 10 year tenure this May.
A Mutual Fund collects money from its many investors to invest in stocks, bonds and other securities. In 2018, the securities exchange commission allowed asset management companies to extend a closed-ended fund to 10 years.
Analysts praised the move by the securities exchange commission. Most closed-end funds can not be liquidated which means an investor can not earn profits when the maturity is reached.
In a virtual meeting held on 25 May 99% voters voted in favor of the proposal to convert the close-ended funds to open-ended funds.
This is the first where an asset manager VIPB Asset Management has opted for a conversion amids of an option to extend the close-ended fund’s tenure to next 10 years. The Investment Corporation of Bangladesh (ICB) is going to act as its custodian and its trustee.
However, open-ended funds are not allowed to be listed and traded among investors. They can only be bought from an asset manager or an authorized agent offering to sell an open-ended fund to an investor.
The fund had been listed on the Dhaka Stock Exchanges since 16 May 2011. So far the fund has reportedly paid Tk. 88.8 crore.