The Bangladesh Securities and Exchange Commission (BSEC), the capital market regulator, has advised investors to invest in closed-end mutual funds listed on the stock market on the basis of net asset value and other information. Investors have been advised not to make investment decisions on the strength of rumours, information circulated on social media or the instigation of any person or group.
The call to investors was made in a BSEC press release on Monday.
The release said it had recently been observed that units of some mutual funds were trading on the capital market at prices significantly higher than the fund’s net asset value per unit. A significant and abnormal gap between the market price of a mutual fund unit and its underlying net asset value calls for special caution when investing, it said, because the value of a fund’s underlying assets is an important consideration in valuing its units. If a mutual fund is liquidated, unitholders cannot receive more money than the fund’s net asset value.
Dhaka Stock Exchange (DSE) data show that five mutual funds are currently trading above their asset value. Of these, First Prime Mutual Fund is trading about 250% above its asset value, with its units changing hands at more than Tk 31 against an asset value of Tk 9. Prime Finance Mutual Fund and CAPM IBBL Mutual Fund are selling at 100% above their asset value, Reliance-1 at more than 20% above and ICB Employees Second Mutual Fund at more than 5% above. The remaining funds are trading below their asset value.
The BSEC also urged investors to make informed decisions after considering a fund’s real asset value, meaning its financial position, as well as its tenure, its type of investment or portfolio and other published information.
On how mutual funds are formed and invested, the release said a mutual fund is a well-organised and regulated investment vehicle in which investors’ money is pooled and invested in a range of financial instruments and assets. Mutual funds are usually formed under a trust structure, with money raised from investors by issuing units on behalf of the trust. The money collected is invested in financial instruments and assets in line with set policies.
A mutual fund’s assets are mainly invested in financial instruments and other investable assets that can be turned into cash immediately. The value of the fund’s total assets is set on the basis of the market value of those assets, and what remains after liabilities are deducted is the fund’s net asset value. The net asset value per unit is worked out by dividing the fund’s total net asset value by the number of units. The asset manager regularly publishes information on the mutual fund as required by the rules.
বাংলায় মূল প্রতিবেদন পড়ুন · Read the original Bengali report