Mutual Fund: Potential to be popular household financial instrument in Bangladesh
Mutual fund is most preferred by the investors worldwide not only because of its higher return yielding nature compared to other household assets but also because it assists the investors by offering professional fund management service with the benefit of diversification and lower investment cost. Even though mutual fund was first introduced in 1980s in Bangladesh, the industry growth has not been very noteworthy.
In developed countries, the size of the industry in terms of Asset under Management (AuM) has sometimes become even larger than the economy itself. The largest mutual fund industry in the world belongs to United States of America (USA). As of 2019, 12.9% of the household financial assets are invested in mutual funds in USA. Among Asian countries, Malaysia (54.0%), Japan (40.6%), and South Korea (34.6%) have been successful in building a sizeable mutual fund industry compared to their economy. The southern part of the region is still struggling. However, India (14.2%) in this regard showed tremendous progress compared to its regional peers like Pakistan (1.5%), Sri Lanka (1.3%) and Bangladesh (0.5%). If the factors behind the tremendous progress of India considered, it can be observed that initiatives such as government incentive, systematic investment plan, product variety, Presence of a structured and active association etc. played a vital role.
On the other hand, this industry of Bangladesh is yet to boom. Innovative and prudent strategies from asset managers along with policy support can take this industry to a new height.
Sushmita Saha
Assistant Manager
IDLC Finance Limited