NLI First Mutual Fund will be an open-ended fund

Unitholders of the hugely popular closed-end NLI First Mutual Fund voted to convert it to an open-end fund.

In an online meeting on Wednesday, investors representing 69.29% of the fund’s shares voted, and 99.93% of votes were in favor of the conversion, according to a statement from the fund’s asset manager, VIPB Asset Management Company.

The fund ended its 10-year tenure as a closed-end fund on February 6 this year, and instead of extending the tenure for another ten years, VIPB decided to leave the fate of the fund in the hands of the fund. unitholders.

This is a rare move as most asset managers in recent years have preferred tenure extension under such circumstances as it helps them secure the fund under management which generates fee income for them. .

Investors may redeem open-end fund units at any time and the relevant asset manager is required to liquidate the assets underlying the redeemed units and reimburse investors in cash. Units cannot be traded on a stock exchange.

Unlike open-end funds, closed-end funds are listed on a stock exchange and unitholders must sell them on the secondary market until they are liquidated.

NLI First Mutual Fund will restart as an open-end fund after the necessary approvals from the Bangladesh Securities and Exchange Commission.

A good performance over a bearish decade

NLI First Mutual Fund was listed on the Dhaka and Chattogram stock exchanges on February 6, 2012, with an initial size of Tk 45.8 crore.

Stock markets were in an extended bearish phase that began with the stock market crash of 2010-11 and ended in mid-2020.

The asset manager sticking strongly to the principles of value investing – Warren Buffet’s method of investing that only cares about a stock’s intrinsic value rather than trying to profit from market swings – the fund has proven to be one of the best performing mutual funds. in the country’s investment sector during the bearish decade.

Against an initial investment of Tk10 per share in 2012, the fund paid out Tk52.1 in total cash dividends over a decade, while capital gains amounted to Tk4.78 per share on 27 january.

The fund generated an annualized return of 14.01% on a compounded decade basis, nearly three times the Dhaka Stock Exchange’s broad index’s 4.93%.

The meeting of unitholders was chaired by the managing director, Md Abul Hossain, of the Investment Corporation of Bangladesh (ICB), trustee of the fund.

BPI President, Prof. Dr. Md Kismatul Ahsan addressed the meeting as the chief guest. VIPB Chairman, Dr. Zia Uddin Ahmed, Managing Director and CEO, PhD MD Shahidul Islam, CFA, and Probir Chandra Das, FCA, Chief Financial Officer of fund sponsor, National Life Insurance Company, were among the attendees.

Dolores W. Simon