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12th-Sep-2018

Don't erode investors' confidence, take pro-people policy about mutual funds

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A NATIONAL daily reported that experts have opposed the government's plan to extend the tenure of closed-end mutual funds by 10 years as the move may erode investors' confidence in the stock market. Closed-end mutual funds are investment funds that gather a fixed amount of money normally for a decade from a number of investors and re-invest them into stocks, bonds and other assets. The Finance Ministry has recently instructed Bangladesh Securities and Exchange Commission (BSEC) to rethink about extending the time for the funds that are going to be liquidated in the coming years. However, experts believed that the move will lower the investors' confidence on mutual funds further at a time when 33 out 37 mutual funds are being traded below face value.
It is observed that the fund managers are calling for the extension only to receive annual fee, for that the mangers are lobbying with the government to get extended tenure. But the regulator should think about the general investors. However, the proponents of the extension say if the funds are liquidated, the market may fall because of selling pressure.
Some analysts also recommended the regulator to give approval to convert the closed-end mutual funds to open-ended mutual funds so that investors can get their money back if they want. In June 2015, the regulator set the 10-year tenure for conversion or liquidation of closed-end mutual funds. Later, a writ petition was filed with the High Court challenging the BSEC's directive. The Appellate Division of the Supreme Court upheld the BSEC directive for the sake of general investors.
By depriving general investors, giving facilities to asset manager or some vested quarters have become sticky feature of the country's stock exchange for a decade. The regulator's stance in favour of market instigators and scammers has successfully kicked out most investors to suffer most. The government's evasion from virtues and rules of law is pathetic and needs to be replenished with business code that favours only general masses.