Eight mutual funds skip dividends

Eight listed closed-end mutual funds did not declare any dividends for their unitholders for the year ended June 30, 2026, despite the Dhaka Stock Exchange’s main index rising 18 percent during the fiscal year.

Closed-end mutual funds collect a fixed amount of money from investors, usually for a 10-year period, and invest the money in shares, bonds and other assets. When the funds make profits, they distribute part of the earnings among unitholders, while fund managers receive management fees. The units are listed and traded on the stock exchange.

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The eight funds are ICB AMCL Sonali Bank Limited 1st Mutual Fund, SEML FBLSL Growth Fund, Prime Bank 1st ICB AMCL Mutual Fund, ICB AMCL Third NRB Mutual Fund, ICB AMCL Second Mutual Fund, IFIL Islamic Mutual Fund-1, ICB Employees Provident MF 1: Scheme 1 and Phoenix Finance 1st Mutual Fund.

Strategic Equity Management Limited manages one of the funds, while ICB Asset Management manages the other seven.

In contrast, Reliance One, the first scheme of Reliance Insurance Mutual Fund, declared a 10 percent cash dividend for its unitholders. ICB AMCL First Agrani Bank Mutual Fund declared a 4 percent dividend.

AIMS Bangladesh manages Reliance One, while ICB Asset Management manages the ICB AMCL First Agrani Bank Mutual Fund.

During the last fiscal year, the DSEX, the benchmark index of the Dhaka Stock Exchange, rose sharply from 4,865 points to 5,762 points.

ICB Chairman Abu Ahmed said the funds were formed when the stock market was at a very high level. The market later fell sharply, reducing the value of their investments.

He said the funds did not sell their shares when prices were falling, resulting in substantial losses.

“Although the market has recovered over the past year, the funds have not fully recovered their losses,” he said.

He said the funds also have to set aside provisions for their previous losses even when they make profits now. This has prevented them from paying dividends.

“To be honest, the funds were not managed very well at that time. If they had sold the shares when prices started falling, the losses would have been much lower,” Abu Ahmed said.

He said ICB had asked the Bangladesh Securities and Exchange Commission (BSEC) for a one-year waiver from the provisioning requirements under IFRS 9.

“Even a partial waiver would have allowed the funds to pay dividends, as they have made profits over the past year,” he said.