First-ever ETF to be launched this year

The launching of the country's first ever Exchange Traded Fund (ETF) is impending as the relevant parties are set to get registration certificate of the fund to float the IPO (initial public offering).

The initial size of the proposed ETF namely LB Multi Asset Income ETF will be Tk 1 billion, of which Tk 100 million will be contributed by the sponsor, while Tk 20 million will come from the asset manager. The remaining Tk 880 million will be raised through private placement and IPO.

LankaBangla Investments is the sponsor of the ETF, while LankaBangla Asset Management is the asset manager.

As part of the move, the sponsor, trustee, asset manager and custodian on Monday signed a trust deed, which will be submitted to the Bangladesh Securities and Exchange Commission (BSEC) after the registration of the deed with the land registration office.

The securities regulator will issue a regulatory certificate of the ETF.

On receipt of the certificate from the BSEC, Tk 880 million will be raised through private placements and IPO.

As per the rules framed by the securities regulator, the ETF will be an actively managed fund. Its benchmark will be the yield of 10-year Treasury bonds.

After listing of the ETF with the Dhaka Stock Exchange (DSE), the market makers will play a role to ensure the trades of the ETF units at a fair price.

In that case, the market price of the ETF will not go above 10 per cent and below 10 per cent of the net asset value (NAV).

Simon Muzib, an assistant vice president of LankaBangla Asset Management, said the ETF is not like mutual funds whose units can trade at significant deviation to its NAV.

"This fund will be traded at fair value with true price discovery," he said, adding that the trading of the ETF is expected to begin this year.

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