On completion of its 10-year tenure, NLI First Mutual Fund has received consent from the securities regulator for its conversion into the open-end form, as unitholders want to run the fund instead of liquidating it.
VIPB Asset Management manages the fund, the Investment Corporation of Bangladesh (ICB) acts as its custodian and trustee while National Life Insurance becomes the sponsor.
Earlier on 16 February, in an online meeting, investors representing 69.29% of the fund units took part in voting and 99.93% of their votes went in favour of conversion, according to a statement by the fund's asset manager.
In this context, the Bangladesh Securities and Exchange Commission (BSEC) has recently approved the conversion of NLI First Mutual Fund, which completed its 10-year tenure on 6 February, from a closed-end into an open-end one.
Open-ended funds cannot be listed and 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.
As of 31 December 2021, its investment portfolio in the stock market was Tk64.51 crore as market value. Out of the total investment, over 66% was made in only seven companies – Brac Bank, Square Pharma, Renata, Singer, Grameenphone, Berger Paints and Marico.
At the end of the first half of fiscal 2021-22, the fund's total asset at the market value of the investment portfolio was Tk73 crore.
During the period, its net profit stood at Tk1.77 crore, which was 82% lower than the previous year for the same period.
Out of the total units of the fund, 32.78% are held by sponsors and directors, while institutional investors and general investors own 40.63% and 26.59%, respectively.
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 were 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 the investment principles – 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.