The trustee committee of Southeast Bank 1st Mutual Fund (SEBL1STMF), a closed-end listed mutual fund, has approved the modality of conversion of the fund into an open-ended fund as per the Bangladesh Securities Exchange Commission's directive dated 8 July 2015.
The approval came at a meeting of the fund's trustee committee held on Sunday.
SEBL1STMF will complete its 10-year tenure on 15 May 2021 and the fund's trade at the stock exchanges will be suspended on 16 May.
This is the first instance where an asset manager voluntarily prefers conversion despite the opportunity to extend the fund's tenure for another 10-year term.
The planned conversion will only occur if at least 75% present unitholders at the meeting approve the conversion proposal. Otherwise, the fund will be liquidated.
"If converted, the investors will have options to remain invested in the fund or exit from it. The fund has had an extraordinary performance track record. We believe that, if converted into an open-ended fund, many existing investors will remain invested in the fund and it will also attract many new investors", said Shahidul Islam, CFA, chief executive officer of VIPB Asset Management Company Limited, the manager of the fund.
The unitholders' meeting to choose between conversion and liquidation will be held on 25 May 2021.
The time and venue of the meeting will be informed later.
SEBL1STMF was listed on the stock exchanges on 16 May 2011 with an initial size of Tk90.7 crore. The fund has so far paid cash dividends amounting to Tk88.8 crore.
Currently, the fund's size in terms of total asset at the market value of the investment portfolio is Tk137 crore.
According to the existing regulations, closed-end funds have to be listed on the bourses until their tenure ends.
On the other hand, as open-ended funds cannot be listed, their units cannot be traded between investors. Unitholders instead buy units from the asset managers concerned or their authorised agents.
Investors can also surrender the fund units to the asset manager and get refunds of their money based on the units' current net asset value.