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.
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.
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.
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।
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.