SEML Lecture Fund to shift to open-ended scheme

The securities regulator has approved the conversion of the SEML Lecture Equity Management Fund from a closed-end scheme into an open-ended mutual fund after the completion of its 10-year tenure.

The decision was taken at a meeting of the Bangladesh Securities and Exchange Commission (BSEC) held on Tuesday, with its chairman Khondoker Rashed Maqsood in the chair, according to a press statement.

With this move, the SEML Lecture Equity Management Fund will become the third closed-end mutual fund in Bangladesh to be converted into an open-ended structure. Earlier, the Southeast Bank 1st Mutual Fund and the NLI First Mutual Fund were converted in 2021 and 2022 respectively after completing their tenures.

The Commission's approval followed feedback collected from the fund's unitholders and an application submitted by its trustee, Bangladesh General Insurance Company Limited.

BGIC had proposed the conversion at a recent meeting after the fund completed its 10-year tenure on December 23 last year. Around 93 per cent of the unitholders supported converting the fund into an open-ended structure.

As part of the approval, the commission also cleared the necessary documents required for the conversion process. The fund will have an initial size of Tk 500 million after becoming open-ended.

Market insiders said the move would allow investors to buy and redeem units directly at net asset value (NAV), improving liquidity compared with closed-end funds that are typically traded on the secondary market.

The fund is managed by Strategic Equity Management Limited, which oversees portfolio management and investment decisions.

BGIC will continue to serve as trustee, while Commercial Bank of Ceylon PLC will remain the custodian responsible for safeguarding the fund's assets.

Officials said the conversion from a closed-end to an open-ended structure is expected to enhance investor flexibility and improve operational efficiency.

Under an open-ended structure, investors can redeem units on any working day. The asset manager must liquidate the underlying assets and pay investors based on the current NAV, which is often higher than the market price of closed-end funds.

The regulator has been encouraging reforms in the mutual fund sector to strengthen investor confidence and deepen the capital market.

Under the amended Mutual Fund Rules-2025, closed-end funds must be redeemed at maturity and tenure extensions are no longer allowed. However, such funds may be converted into open-ended schemes if at least 75 per cent of unitholders, based on ownership share, approve the move.

Trading in the SEML Lecture Equity Management Fund's units has remained suspended since October 30 last year, when it closed at Tk 7.40 per unit.

The fund, which has an initial size of Tk 500 million, was listed on the stock exchanges in January 2016.

Its total net asset value stood at Tk 493.32 million at market price and Tk 590.27 million at cost price, according to the latest data.

The fund distributed cash dividends ranging from 2.5 per cent to 15 per cent between 2016 and 2023. Its current NAV per unit stands at Tk 9.87, slightly below the face value of Tk 10.

Taking into account dividend income and NAV, unitholders earned an average annual return of about 5.15 per cent from the fund.

Currently, there are 37 close-ended mutual funds on the stock exchanges. Of them, 33 are trading far below the face value of Tk 10 per unit. The number of open-end mutual funds is more than 100.

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