Unit holders of the very successful closed-end NLI First Mutual Fund have voted to convert it into an open-ended one.
In an online meeting on Wednesday, investors representing 69.29% of fund units cast their votes, and 99.93% of the votes went in favour of the conversion, according to a statement by the fund's asset manager, VIPB Asset Management Company.
The fund ended its 10-year tenure as a closed-end fund on 6 February this year, and instead of extending the tenure for another ten years, VIPB has decided to leave the fund's fate in the hands of unit holders.
This is a rare move as most asset managers in recent years have preferred tenure extension in such circumstances because it helps them secure the fund under management that generates fee income for them.
Investors can surrender open-ended fund units any day and the concerned asset manager is bound to liquidate the underlying assets of the surrendered units and pay cash back to investors. Units cannot be traded on the stock exchanges.
Unlike open-ended funds, closed-end funds are listed in the stock exchanges and unit holders have to sell them on the secondary market until liquidation.
NLI First Mutual Fund will start afresh as an open-ended fund after necessary approvals from the Bangladesh Securities and Exchange Commission.
A wonderful performance over a bearish decade
NLI First Mutual Fund was listed on the Dhaka and Chattogram bourses on 6 February, 2012, with an initial size of Tk45.8 crore.
The bourses had been in a prolonged bearish phase that began with the 2010-11 market crash and ended in mid-2020.
With the asset manager strongly sticking to value investment principals — the Warren Buffet way of investment that only cares about the intrinsic value of a stock rather than trying to cash in on market fluctuations — the fund turned out to be one of the best performing mutual funds in the country's investment industry in the bearish decade.
Against an initial investment of Tk10 per unit in 2012, the fund paid Tk52.1 in total cash dividends over a decade, while capital gains stood at Tk4.78 per unit on 27 January.
The fund generated an annualised return of 14.01% on a compound basis over a decade which was nearly three times the 4.93% of the broad index of the Dhaka Stock Exchange.
The unit holders' meeting was presided over by Managing Director Md Abul Hossain, of the Investment Corporation of Bangladesh (ICB), the fund trustee.
ICB Chairman, Professor Dr Md Kismatul Ahsan, spoke at the meeting as chief guest. VIPB Chairman Dr Zia Uddin Ahmed, Managing Director & Chief Executive Officer PhD MD Shahidul Islam, CFA, and Probir Chandra Das, FCA, Chief Financial Officer of the fund's sponsor, National Life Insurance Company, were among the participants.