Mutual funds' dividend payment falls amid market turmoil  

Dividend payment by the country's mutual fund industry has decreased significantly year-on-year in the fiscal 2022-23, owing to the multifaceted challenges the industry is facing.

This has affected the income of asset management companies – which operate mutual funds – in fund management. The companies paid a dividend of Tk283 crore to investors in fiscal 2022-23, compared to Tk630 crore a year ago.

Hasan Imam, president of the Association of Asset Management Companies and Mutual Funds, said mutual fund-invested sectors have become illiquid to a great extent. The industry has invested around 75% of the funds in six sectors.

"As a result, fund managers have limited ability to rebalance portfolios due to cash flow challenges, underlying companies paying lower dividends due to the challenging macro-economy, and heavy provisioning weighing on profits," he said at a seminar in Dhaka on Tuesday (3 October).

The association organised the event titled "Role of SDG analytics in capital market-based development financing" at Parjatan Bhaban on the occasion of World Investment Week.

According to fund management industry insiders, mutual funds are doing well despite the downturn in the capital market. The funds have given better returns compared to equities and fixed deposit receipts during the last 10 years.

For example, by investing Tk100 during 2013-23, an investor received an average return of 88% on mutual fund investments, 72% on FDRs, and 55% on equities.

The association plans to set a target of at least 25% of mutual funds' investment in sectors related to the implementation of SDG goals by 2030.

Shaikh Shamsuddin Ahmed, commissioner of the Bangladesh Securities and Exchange Commission (BSEC), said, "If good companies and debt securities are not listed in the capital market, the mutual fund industry will not progress. One can think of investing in ventures that will result in good profits."

BSEC Commissioner Mizanur Rahman said the mutual fund industry is worth Tk16,000 crore, which is very small.

"There is room for improvement. The current commission is working to ensure good governance of asset management companies and investor safety," he added.

Zubayer Hossen, coordinator and economist at UNDP Bangladesh, presented the keynote paper at the seminar.

Among others, BSEC Executive Director Rezaul Karim, LR Global Bangladesh AMC's Chief Investment Officer Reaz Islam, and Vangurd AML Managing Director Waqar Ahmed Coudhury spoke at the event.