Mutual funds are capable of paying double-digit dividend: BSEC Chairman

Listed mutual funds have the capability of paying 10-18% dividend to their investors, said Professor Shibli Rubayat-Ul-Islam, chairman of Bangladesh Securities and Exchange Commission (BSEC).

He made the comment at the launch event of a personal finance-related online portal called "Amar Taka," which he attended as the chief guest on Tuesday.

Shibli Rubayat-Ul-Islam said, "Mutual funds are a good alternative instrument for investment all over the world. We are trying to promote it in the capital market here."

The BSEC Chairman also said there has been some confusion regarding the mutual funds here in the past. Some funds were invested in the wrong places – in other sectors outside the stock market. Initiatives have been taken to bring back these investments.

"We have already resolved some issues regarding the mutual funds, which is a positive move for this sector. The regulator is trying to increase transparency and accountability in mutual funds," he said.

He also said Bangladeshi investment forums will have discussions with foreign investors in Dubai, Shanghai, Hong Kong, London and New York on how to invest in Bangladesh.

"We want big investments to come here. If you can do it right, billions of dollars will be invested in the market," he added.

Insurance Development and Regulatory Authority of Bangladesh (IDRA) Chairman, M Mosharraf Hossain was a special guest, while Ziaur Rahman, the editor of 'Amar Taka' chaired the meeting.

Executive President of the Bangladesh Institute of Capital Markets (BICM), Prof Mahmuda Akhter, was also present at the event.

IDRA chairman, M Mosharraf Hossain, said, "We have taken steps to reduce the costs of insurance companies to 15%". Earlier, the companies used to spend 75-80%, including commission costs."

"As a result, we have recently seen a positive change in financial statements of these companies," he added.

Shahidul Islam, chief executive officer of VIPB Asset Management Company Limited, presented the keynote paper on "Products and Instruments for Managing Personal Finance" at the meeting.

Referencing different instruments for investors in the capital market, he said that in most financial markets, mutual funds and Exchange-Traded Funds or ETFs appeal to individual investors who are unable to do research on individual stocks and bonds.

He said, "As mutual funds and ETFs offer diversification benefits to investors, they are meant to be less risky than individual stocks or bonds. In some countries, mutual fund assets represent almost 50% of equity market cap. But it is negligible in our country – about 3% of equity market cap."

BICM Executive President, Mahmuda Akhter said financial literacy should reach rural investors nationwide, so that they can acquire knowledge on capital market investments.

According to Amar Taka, the portal will feature informative features on savings, investments, banking, insurance, housing, income tax and shopping.