Frequently Asked Questions

What is Mutual Fund?

Mutual fund is a professionally managed investment vehicle that pools money from many investors to invest in securities such as stocks, bonds, money market instruments and similar assets across a wide range of industries and sectors. Mutual funds are managed by professional asset managers to attain the investment objectives of the investors of the fund.

What are the Different types of Mutual Funds?

Open-end – A type of mutual fund that does not have a maturity period so investors can buy and sell units through the asset manager on a continuous basis. There are also no restrictions on the amount of shares the fund can issue.

 

Close-end – A type of mutual fund that has a fixed maturity period and issues a fixed number of shares during a certain period at the time of launch. Investors can invest in the fund at the time of the IPO and thereafter, they can only buy and sell units in the capital market.

How have Mutual Funds Evolved?

The arrival of the modern day mutual fund was marked by the creation of Massachusetts Investors' Trust, in Boston, Massachusetts, USA in 1924. Since then the industry has evolved at a stunning pace with introduction of different types of mutual funds catering to the investment goals of people. Mutual fund has become one of the most popular investment vehicle of modern age around the globe with a total asset under management of USD 74.0 trillion worldwide. In Bangladesh asset under management is currently USD 1.2 billion, while it is USD 333.2 billion in our neighboring country India, which shows our growth potential.

What are the common benefits of investing in a Mutual Fund?

Access to professional asset managers – Investors’ money is managed by experienced and knowledgeable asset managers using fundamental and technical analysis.

 

Diversification – Diversification allows investors to invest in a number of companies across a wide range of industries and sectors, which in turn minimizes risks. Individual investors with a small surplus can diversify their funds only through mutual funds, which would not have been possible otherwise.

 

Liquidity – For open-ended funds, investors can buy and sell units on a continuous basis so they can liquidate their investments at any time.

 

Tax Efficiency – Investors are eligible for tax rebate depending on the amount invested. Asset Management Companies are required to distribute 70% of the earning as dividends to investors, out of which up to TK 25,000 is tax-free. In addition, profits generated by the mutual fund are also tax exempted.

 

Low transaction costs – By investing in a Mutual fund, investors invest in a wide range of instruments – various securities, bonds, debentures and other money-market instruments such as FDR, etc. all at once. Therefore, as they are investing collectively, they do not need to pay taxes or other fees/charges separately for each instrument which leads to overall lower transaction fees.

 

Transparency – Investors have access to the value of their investment on a weekly basis. The portfolio is also disclosed quarterly with the asset manager's investment strategy and outlook. In addition, the prospectus discloses all other necessary information in details.

 

Well-regulated industry – All mutual funds must be registered with Bangladesh Securities and Exchange Commission and they function under strict regulations designed to protect the interests of investors.

 

What

A: There is no guaranteed percentage of return. Empirically, it has been observed that mutual funds can generate higher return than all other asset classes in the long run.

How can you guarantee profit when the market in Bangladesh is volatile?
  1. Profit is not guaranteed when investing in IDLC Balanced Fund. However, mutual funds can generate better returns in the long-run even in volatile markets leveraging professional fund management skills.
What do you mean by expert fund manager?

A: An expert fund manager is a skilled professional capable of generating better returns and managing risks through dynamic asset allocation.

Who is the regulatory body for Mutual Fund?

A: Bangladesh Securities and Exchange Commission (BSEC) is the regulatory body of Mutual Funds in Bangladesh.

What are the key parties related to Mutual Fund?

Sponsor: The sponsor initiates the mutual fund by subscribing minimum 10% of the total fund size. The Sponsor appoints the trustee, Custodian and the Asset Management Company.

 

Trustees: The board of trustees are responsible for protecting the interests of the unit holders. It is an independent body having received the trusteeship license from the regulator and is not associated with the Sponsor or the Asset Management Company.

 

Custodian: The custodian is responsible for physical handling and safe keeping of the assets managed by the Asset Management Company. They receive the Custodian license from the regulator and are independent of the Sponsor or the Asset Management Company.

 

Asset Management Company (AMC): The Asset Management Company is responsible for floating and managing the mutual funds in accordance with Bangladesh Securities and Exchange Commission regulations and guidelines provided by the Trustee.

What is Net Asset Value (NAV)?

Net Asset Value is defined as the market value of all assets in the fund less liabilities. NAV is generally declared on per unit basis, dividing the total Net Asset Value by the outstanding number of units of the fund.

Can the NAV below the face value of my investment?

A fund’s NAV goes up or down depending on change in market value of the assets held by the fund. Therefore, if the market value of the assets falls substantially, there is a chance of the NAV going below the face value of the fund. However, such events are expected to be temporary as NAV is projected to grow in the long term with expert asset management.

Is IDLC Balanced Fund halal?

IDLC Balanced Fund does not follow any such specific Shariah law or policy.

Is there any entry or exit fee?

There is an exit fee of 0.5% charged on NAV for holding period below 1 year. However, there is no exit fee for holding period equal to or more than 1 year.

How much is the Management Fee?

The management fee for BDT 50 crore is 1.8% p.a. and for BDT 100 crore is 1.4% p.a.

What is Front End Load?

A commission fee applied when initially purchasing units in a mutual fund, which is deducted from the total investment amount.

What is Back-End Load?

A commission fee applied when redeeming units from a mutual fund, which is deducted from the total investment amount.

Who can invest in a Mutual Fund?

Both Individual (singly or jointly) and Institution (local and foreign) can invest in a mutual fund. In addition, other mutual funds and collective investment schemes can also invest in a mutual fund.

How to invest in a Mutual Fund?

For open end mutual fund, the investor has to buy mutual fund from the Asset Management Company (IDLC Asset Management Limited) or the Selling Agents (IDLC Finance Ltd., IDLC Securities Ltd., IDLC Investments Ltd.).

 

For close end Mutual fund, the investor can buy mutual fund either by investing in IPO initially or through the stock exchanges (i.e., Dhaka Stock Exchange and Chittagong Stock Exchange) after listing of the mutual fund.

What is the list of required documents?

For Individual investor, following documents are required –

Copy of National Identity Card/Passport/Driving license/Identity Card (for students)

One Passport size photo - Single applicant, Joint applicant (if any), Nominee

Bank statement or Photocopy of a blank cheque leaf

E-TIN Certificate

 

 

For institutional investor, following documents are required –

Extract of Board resolution for investing in mutual fund

Power of Attorney of the Authorized signatories

Memorandum and Article of Association

Trust Deed (for mutual fund)

Certificate of Incorporation

One Passport size photo – CEO / MD, 1st Authorized Person, 2nd Authorized Person (if any)

Bank statement or Photocopy of a blank cheque leaf

E-TIN Certificate

How do I know where my money is being invested?

A: We invest in stocks, bonds and other money market securities to generate maximum risk adjusted return. Full investment portfolio will be disclosed on a quarterly basis.

How do I receive returns from a Mutual Fund?

Two types of returns any investor can get from investing in mutual fund:

Capital Gain

Dividend

How do I deposit my money to invest in a Mutual Fund?

Investor can submit the money (cheque / pay order / demand draft) to the head office of IDLC AML or any selling agent as appointed by the Asset Management Company. The investor can directly deposit / BEFTN / Online transfer the fund in the designated bank account of the mutual fund.

Do I need a BO account to invest in a Mutual Fund?

Yes, it is mandatory to have a BO account as units of the mutual fund will be credited to the designated BO account of the unit-holder.

Can I open BO account?

To open an account with IDLC Securities, the opening fee is BDT 500.00 and the annual fee is BDT 500.00. However, there is no BO account opening fee for existing account-holders.

Is there a lock in period for my Investment?

No, there is no lock-in period in the investment of the mutual fund.

Is there any transferability option for my Investment?

The units can be transferred from one unit-holder to another through the Asset Management Company.

Is it Mandatory to have an E-Tin Certificate?

No, it is not mandatory to have an E-TIN certificate. However, the unit-holder having E-TIN Certificate will have to pay only 10% tax (AIT) against dividend income. On the other hand, the unit holder who doesn’t have any E-TIN will have to pay 15% tax against dividend income.

Is there a Monthly Deposit Scheme?

Yes, there is a monthly deposit scheme for the mutual funds managed by IDLC Asset Management Company which is known as SIP (Systematic Investment Plan).

 

Investor can invest in SIP with as little as BDT 1,000 or multiple of BDT 500 / BDT 1000. The SIP amount can be increased or decreased in regular fashion. The SIP will be offered for a minimum of 2 years up to 3 years / 5 years / 7 years / 10 years tenure.

What is the minimum amount one can invest?
  1. The minimum amount to invest in our mutual fund is 500 units and 5000 for investors. In terms of taka, the amount is equivalent to 500 units x Investor’s Buy Price. Investors must also purchase units in increments of 500.

 

For example: If the Investor’s Buy Price is BDT 10.06, the minimum amount one can invest = BDT 10.06 x 500 units = BDT 5,030.

(To check this week’s Investor’s Buy Price, please visit http://aml.idlc.com/nav.php)

What is an Investor’s buy Price?

The price or NAV an investor can buy units of an open-ended fund is called an investor’s buy price. Usually, this is slightly higher than the NAV.

What is an Investor’s Sell Price?

The price or NAV an investor can repurchase or sell units of an open-ended fund is called an investor’s sell price. Usually, this is slightly lower than the NAV.

Can I buy Mutual Fund units after the IPO?

Yes, investors can buy units after IPO. The difference is that during IPO investors purchase units at face value, which is BDT 10.0, whereas, after the IPO closing, investors purchase units at the investor’s buy price declared by the Asset Management Company.

 

What is the minimum investment amount during IPO?

During IPO, investors must purchase at face value of BDT 10.00:

 

Individuals: 1 lot = 500 units

 

Face Value: BDT 10.00

 

Minimum Investment: 500 units x BDT 10.00 = BDT 5,000

What is the Minimum Investment amount after IPO?

After IPO, investors must purchase at NAV, which can be higher or lower than face value:

 

Individuals: 1 lot = 500 units

 

Net Asset Value: BDT 10.20 (for example)

 

Minimum Investment: 500 units x BDT 10.20 = BDT 5,100

 

OR

 

Net Asset Value: BDT 9.80 (for example)

 

Minimum Investment: 500 units x BDT 9.80 = BDT 4,900

How long do I have to wait to receive my Money?

The sale amount will be credited to the bank account of the unit-holder within 7 working days after surrendering the units. The cash dividend will be credited to the bank account of the unit-holder within 45 days after declaration of dividend in the trustee meeting.

Do I receive Proof of Purchase after my Investment?

Yes, an acknowledgement slip will be provided while you submit the “Purchase Form” along with the cheque. A “Confirmation of Unit Allocation” will be issued in favour of the unit-holder after crediting the units to the BO account of the unit-holder.

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