Over 70% unitholders of two LR Global-managed mutual funds want to replace asset manager

More than 70 percent unitholders of the DBH 1st Mutual Fund and the Green Delta Mutual Fund want to replace their asset management company (AMC) with a new one.

Controversial LR Global Bangladesh Asset Management Company Ltd is managing both the closed-ended mutual funds, while majority of the owners of the funds want to appoint IDLC Asset Management Ltd as the operator of the two funds with immediate effect.

Investors representing 72.5 percent units of the DBH 1st Mutual Fund separately have written to the trustee – Bangladesh General Insurance Company (BGIC) Ltd – to change the asset manager.

On the other hand, the same trustee has been requested by Green Delta Insurance Company Ltd, the sponsor of the Green Delta Mutual Fund, to replace the current asset management company with a new one.

BGIC Managing Director Ahmed Saifuddin Chowdhury's cell phone was found switched off when The Business Standard called him to obtain his comment in this respect. Meanwhile, his deputy general manager, who is responsible for trustee services, declined to comment over phone.

However, sources from the office of Saifuddin confirmed that the letters had already reached there.

Copies of the letters obtained by The Business Standard reveal some top institutional investors of the country like Brac Bank, NCC Bank, Eastern Bank, Agrani Equity, Delta Life Insurance Company, Green Delta Insurance Company itself, IDLC Investments, IDLC Asset Management, VIPB Asset Management, Edge Asset Management, Vanguard Asset Management and the Delta Brac Housing Corporation want the Green delta sponsored mutual fund not to be managed any longer by LR Global Bangladesh Asset Management Company.

A foreign investor also joined the group of unitholders to represent 70.12 percent units of the said fund.

The DBH 1st Mutual Fund unitholders who sought replacement of their money manager include Brac, Brac Bank, IDLC Investments, United Commercial Bank, VIPB Asset Management, IDLC Asset Management, Delta Life Insurance Company, EDGE Asset Management, Asian Tiger Capital Partners AMC, and the fund's sponsor – the Delta Brac Housing Corporation itself.

Rule-31 of the Bangladesh Securities and Exchange Commission (Mutual Fund) Rules 2001 has provided the unitholders with a freedom to replace the money management firm if they represent at least two-thirds of the fund units.

For that, no unitholders' meeting is required and the securities regulator – Bangladesh Securities and Exchange Commission – must approve the plan before the replacement takes place, according to the rule.

Some of the signatory unitholders told The Business Standard they do not rely on the current AMC any longer to manage their wealth as the company was again trying to make controversial and risky investments into private securities.

They are much concerned about the transparency of the aforementioned investment attempt, said the unitholders.

The stock market regulator, a few years back, fined the LR Global Bangladesh Asset Management Company for making illegal investments with unitholders' money.

Seventy-eight percent unitholders of the DBH 1st Mutual Fund have already requested the trustee to call a unitholders meeting on converting the fund into an open-ended one and the BSEC instructed the trustee to arrange the sought meeting.

Earlier, the asset management company of Sandhani Life Unit Fund – an open ended mutual fund – was changed, and the unitholders appointed Alliance Capital Asset Management Limited to manage their asset.