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.
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.
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.
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 a percentage of the earning (refer to fund-specific prospectus for exact %) 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.
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.
A: An expert fund manager is a skilled professional capable of generating better returns and managing risks through dynamic asset allocation.
A: Bangladesh Securities and Exchange Commission (BSEC) is the regulatory body of Mutual Funds in Bangladesh.
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.
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.
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.
IDLC Balanced Fund does not follow any such specific Shariah law or policy.
There is no entry or exit fee.
Fund Size (in BDT Crore)
Highest Allowable Management Fee
Less than 5
5 < 25
25 < 50
Source: Page 601-602, Chapter 9, Section: Securities & Exchange Commission (Mutual Fund) Rules 2001.
A commission fee applied when initially purchasing units in a mutual fund, which is deducted from the total investment amount.
A commission fee applied when redeeming units from a mutual fund, which is deducted from the total investment amount.
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.
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.
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
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
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.
Two types of returns any investor can get from investing in 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 the fund in the designated bank account of the 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.
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.
No, there is no lock-in period in the investment of the mutual fund.
The units can be transferred from one unit-holder to another through the Asset Management Company.
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.
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).
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)
The price or NAV an investor can buy units of an open-ended fund is called an investor’s buy price.
The price or NAV an investor can repurchase or sell units of an open-ended fund is called an investor’s sell price.
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.
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
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
Net Asset Value: BDT 9.80 (for example)
Minimum Investment: 500 units x BDT 9.80 = BDT 4,900
The sale proceeds will be credited to the bank account of the unit-holder within 7 working days after surrendering the units. Please ensure the submission of Surrender Form (to the Asset Manager) and CDBL Transfer Form (to the designated Broker House) to complete the Surrender Procedure. Refer to http://aml.idlc.com/forms.php for all forms.
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.
Risks associated with mutual fund: abundance
The dividend (Cash / Reinvestment Unit) will be credited to the Bank / BO account of the unit-holder within 45 days after declaration of dividend in the trustee meeting.