History

Formation Of EBL NRB Mutual Fund:

Over the last decade, the Bangladesh capital market has grown rapidly in size and volume through the efforts of regulators, local exchanges, brokerages, merchant banks and other institutions. Yet the nature and composition of this growth has given rise to some structural problems, such as excessive volatility, speculation based investing, and unusual churn. One of the most effective solutions to these structural issues is by increasing participation of mutual funds in our capital markets … firstly, mutual funds by virtue of being managed by professionals with the right expertise usually invest on the basis of fundamental research and protect such investments from catastrophic loss through proper risk-management. Thus, mutual funds “invest” rather than “speculate” and can play a vital role in institutionalizing the market and act as a counterweight to excessive market volatility and manipulation. Secondly, mutual funds pool investment capital from thousands of retail investors and institutions who are not market specialists; by doing so mutual funds can bring retail investors’ funds under an institutional umbrella and thereby protect these small investors from excessive volatility and speculation.

EBL launched the first ever Commercial Bank sponsored Mutual Fund in Bangladesh, EBL First Mutual Fund. This Fund has already paid out 20% cash dividend – the highest-ever dividend from a 1st-year Mutual Fund in Bangladesh. The success of the EBL First Mutual Fund has reinforced the Company’s belief that the development of a research-driven mutual fund industry will bring in more efficiency and transparency into the country’s capital markets. Therefore, to further develop and institutionalize our growing capital market, the Bank has decided to sponsor its second mutual fund, EBL NRB Mutual Fund. This Fund will invest in the capital market using a similar experienced world-class investment management process and professionals as EBL First Mutual to earn the maximum benefit for its investors.

In this endeavor, EBL has once again appointed Bangladesh RACE Management PCL to be the Fund Manager. Bangladesh  RACE Management PCL has already developed a successful track record as a successful Fund Manager in the Bangladeshi Capital Market. The Bank has also appointed Bangladesh General Insurance Company (BGIC) as the Trustee and BRAC Bank Limited as the Custodian of the Fund.

Formation Of The Proposed Mutual Fund In The Context Of Present Market Scenario:

Since 2006, a number of factors have increased the popularity of stock market investing among Bangladeshi retail investors, including: rising income, low interest rates in traditional bank savings
accounts, large stock investment gains, and increased media coverage. This exponential increase in demand is reflected in the 12x growth in average daily trading volume in the stock market during the last 3 years – from Tk. 200 crores in 2006-07 to its peak level of over Tk. 2,500 crores.

Despite this significant growth in investor participation in the Bangladeshi stock market, and the demand for professionally managed investment vehicles, the domestic mutual fund industry has not responded with adequate supply. With less than 40 individual funds to choose and over Tk. 3,500 crores in funds under management, the mutual fund industry has been slow to respond to current capital market realities and comprises only a small percentage of the total stock market investments. To meet this large unsatisfied demand for mutual fund investments in Bangladesh, Eastern Bank Limited is floating the EBL NRB MUTUAL FUND. In this endeavor, Eastern Bank Limited has appointed Bangladesh RACE Management PCL to be the Fund Manager; Bangladesh RACE Management has a successful track record in Bangladesh stock market as the largest private Asset Management Company in terms of funds under management in Bangladesh.

Advantages In Investing In EBL NRB Mutual Fund:

Generally investment in mutual funds enjoys some additional advantages compared to investments made directly in other securities of the capital market. Investors of this mutual fund should be able to enjoy the following advantages.

  1.  The Fund will maintain a diversified portfolio which will lower the investment risk for investors.
  2. The diversified portfolio will allow investors gain a broad exposure to the overall stock market which may not be possible at the individual level.
  3. This Fund provides access to extensive local research and investment experience. The Fund Manager, Bangladesh RACE Management PCL has developed deep insight into the dynamics of the local
    capital markets. RACE’s research department consistently produces insightful research products on the Bangladeshi stock market which have been highly commended by both local stock market participants and foreign investors.
  4. As the management of the investments in the Fund is outsourced to a professional Asset Management Company, investors will be relieved from any emotional stress associated with
    day-to-day management of individual investment portfolio. In fact, investment management usually requires a significant amount of time-consuming research and analyses to identify the
    highest-quality securities which may not be doable for the general investor and is, therefore, best left to professional investment managers.
  5. The investors will be able to save transaction costs as he/she has access to a large number of
    securities by purchasing a single unit of EBL NRB MUTUAL FUND.
  6. Income will be tax free up to certain level, which is permitted as per Finance Act.
  7. Investment in the Fund would qualify for investment tax credit under section 44(2) of the Income Tax Ordinance 1984.
  8.  Management and operation of Mutual Funds are subject to strict regulations from Bangladesh Bank, SEC and the Trustee. SEC regularly monitors the performance of such funds. The laws
    governing mutual funds require exhaustive disclosures to the regulator and general public and, as such mutual funds are one of the most transparent investment vehicles in Bangladesh.
  9. In Bangladesh, the mutual funds enjoy a 10% (ten percent) reserved quota in all Initial Public Offerings (IPOs). Given the lack of supply of high-quality scripts in the Bangladeshi stock market, IPOs have historically outperformed the general Bangladeshi market index significantly and, therefore, have been a major source of outperformance for the mutual fund
    industry in Bangladesh.

The Constitution Of The Fund:

EBL NRB Mutual Fund has been constituted through a Trust Deed entered into between Eastern Bank Limited and Bangladesh General Insurance Company on August 19, 2010 under the Trust Act, 1882 and Registration Act, 1908.

The Fund was registered by the SEC on August 30, 2010 under the সিকিউরিটিজ ও এক্সচেঞ্জ কমিশন (মিউচ্যুয়াল ফান্ড) বিধিমালা, ২০০১।

Life Of The Fund:

The Fund will be a closed-end mutual fund of 10 (Ten) years.As per BSEC’s Directive No BSEC/CMRRCD/2006-157/210/Admin/83, dated October 02, 2018, the tenure of the fund may be increased up to another 10 years, established with a view to broaden the base of investment and develop the capital market.

Size, Face Value And Market Lot Of The Fund:

  • The initial Fund size is fixed at 150,000,000 (Fifteen crore) units of Tk. 10 each totaling Tk. 1,500,000,000 (Taka one hundred and fifty crore).
  • The Sponsor’s portion of the Fund is 25,000,000 (Two crore and fifty lac) units of Tk. 10 each totaling Tk. 250,000,000 (Taka twenty five crore).
  • Size of the Pre-IPO Private Placement is 50,000,000 (Five crore) units of Tk. 10 each totaling Tk. 500,000,000 (Taka fifty crore).
  • Size of the Initial Public Offering (IPO) is 75,000,000 (Seven crore and fifty lac) units, each worth Tk. 10, totaling Tk. 750,000,000 (Taka seventy five crore) available as public offering to general public, NRBs, Mutual Funds and collective investment schemes.