Two mutual funds set to convert to open-end structure

Two mutual funds listed on the capital market – Vanguard AML BD Finance Mutual Fund One and SEML Lecture Equity Management Fund – are preparing to convert from closed-end to open-end status as they near the end of their tenure.

To seek investor approval, the trustee boards of both funds have decided to hold separate meetings with unit holders.

According to a disclosure on the Dhaka Stock Exchange (DSE) website yesterday, the tenure of both funds will expire on 23 December 2025.

In line with a 2015 directive from the Bangladesh Securities and Exchange Commission (BSEC), published in the official gazette in August that year, the respective asset management companies have formally submitted conversion proposals to the trustees.

Closed-end mutual funds in Bangladesh typically have a fixed tenure of five or ten years. They raise capital through initial public offerings (IPOs) and are listed on the stock exchange, where their units are traded based on market demand and supply. At present, 37 such funds are listed.

In contrast, open-end mutual funds have no fixed tenure and are not listed on the stock exchange. Investors can buy and sell units directly through the asset management company at the fund's daily net asset value. These funds generally offer higher liquidity, making them more attractive to many investors.

Market experts say the timely conversion of matured closed-end mutual funds into open-end funds helps protect investor interests and promotes sustained long-term investment in the capital market. Converted funds allow investors to retain their units while ensuring continued liquidity.

"The conversion process will boost investor confidence and improve accountability in fund management," said a senior fund manager. "Had these funds been liquidated, a substantial amount of capital would have exited the market at a difficult time, negatively affecting overall market stability."

Under the 2015 directive from the BSEC, closed-end funds must seek approval from unit holders for conversion upon maturity, with the asset management company responsible for covering all related costs.

Trustee boards of the two funds said they expect cooperation from the regulators and are optimistic about completing the conversion process on time.

Conversion plans of the two funds

Vanguard Asset Management Limited, the asset manager of Vanguard AML BD Finance Mutual Fund One, submitted a conversion proposal to the trustee on 15 July.

Based on a board resolution, Vanguard expressed its interest in continuing to manage the fund after conversion. The company also agreed to bear all expenses related to the process, including regulatory fees, unit holder meeting costs, and legal formalities.

Following this, the trustee board approved the proposal and scheduled a temporary suspension of unit trading on 22 October 2025. The conversion will take effect on 23 October 2025, when the unit holder meeting is set to be held.

Similarly, Strategic Equity Management Limited (SEML), the asset manager of SEML Lecture Equity Management Fund, submitted a similar proposal in July. SEML also expressed its intent to continue managing the fund and agreed to cover all conversion-related costs. The trustee board approved SEML's proposal and set the same dates for trade suspension and the unit holder meeting as Vanguard.