NLI First Mutual Fund to be open-ended

When most asset management companies in Bangladesh try to extend the tenure of closed-end mutual funds to retain them, VIPB Asset Management Company has decided to convert its fund into open-ended.

Mutual funds are investment funds that gather a fixed pool of money from several investors and re-invest them into stocks, bonds and other securities and then distribute the profits among the unitholders.

Open-ended mutual funds have no timeframe to mature and are not listed with the bourses. So, investors can withdraw funds anytime on the basis of net asset value (NAV). On the other hand, closed-end funds are normally launched for 10 years.

Yesterday, a meeting of unitholders of NLI First Mutual Fund was held on a virtual platform to decide the fate of the fund, whose 10-year tenure as a closed-ended mutual fund ended on February 6. In the meeting, the unitholders voted on a proposal to convert the fund into an open-ended fund. Unitholders representing 69.29 per cent units of the fund cast their votes, according to a press release of VIPB Asset Management Company, the asset manager of the fund.

A staggering 99.93 per cent of the votes went in favour of the proposal. The fund will now resume its journey as an open-ended fund after securing approval from the Bangladesh Securities and Exchange Commission.

Md Abul Hossain, managing director of Investment Corporation of Bangladesh (ICB), the trustee of the fund, presided over the meeting.

Prof Md Kismatul Ahsan, chairman of ICB, Zia Uddin Ahmed, chairman of VIPB Asset Management Company, Shahidul Islam, CEO of the asset management company, and Probir Chandra Das, chief financial officer of National Life Insurance Company, the sponsor of the fund, spoke at the event.

The initial size of the fund was Tk 45.8 crore. It has paid a total cash dividend of Tk 52.1 crore throughout its tenure.

On February 6, the fund's size, in terms of total net asset value at market value, was Tk 75.2 crore.

The fund generated an annualised compound rate of return of 14.01 per cent, whereas the DSEX, the benchmark index of the Dhaka Stock Exchange, rose 4.93 per cent per year during the period.