First-ever exchange traded funds get approval

The Bangladesh Securities and Exchange Commission (BSEC) yesterday approved two exchange traded funds (ETF), namely LB Multi Asset Income ETF and FAM DG Bengal Tiger ETF, which are the first-ever ETF funds in the country.

The BSEC approved the ETFs in a commission meeting held at its own office in Dhaka's Agargaon.

Tap here to add The Daily Star as a trusted source

An ETF is a type of pooled investment from investors that operates much like a mutual fund.

The difference is that it is used to invest in certain stocks that are included in an index, sectors or other assets. On the other hand, mutual funds can be used to invest in any stock or fixed-income asset.

The fund size of the LB Multi Asset Income Fund would be Tk 100 crore. The fund provider is LankaBangla Investment while the trustee is Bangladesh General Insurance Company.

Meanwhile, its asset manager is LankaBangla Asset Management Company.

The fund size of FAM DG Bengal Tiger ETF is Tk 50 crore while the fund providers are Frontier Asset Management and Dawn Global, and its trustee is MTB Capital.

Frontier Asset Management is working as its asset manager.

Both funds are actively managed ETFs, meaning they will have a benchmark index, but managers may change sector allocations, market-time trades, or deviate from the index as they see fit. This produces investment returns that do not perfectly mirror the underlying index.

In June of the current year, the Dhaka Stock Exchange announced that it had taken the necessary steps to launch ETF funds at its alternative trading board.

With the ETF funds, stock market investors will get a new product to pour their funds into.