5 years ago

ICB moots unit fund to support stock market

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The Investment Corporation of Bangladesh (ICB) has made a move to float another open-ended mutual fund to support the country's stressed capital market.

The initiative is part of its continuous market supportive measures.

The state entity has recently submitted a proposal, among others, to float Unit Fund-2 to finance minister.

As suggested, the initial size of the fund will be Tk 30 billion and ICB will be the fund manager.

Of the amount, Tk 10 billion will be collected from sponsors such as banks and financial institutions.

The face value of the units will be Tk 100 each.

"Capital market will get good support if the proposal for Unit Fund-2 is approved. The entire fund will be invested there," said ICB managing director Md Abul Hossain.

After the 2010-11 stock market debacle, ICB had floated the Bangladesh Fund with a proposed size of Tk 50 billion.

But the fund failed to fulfil the target within an expected timeframe as some institutions did not provide support as per their commitment.

To this end, Mr Hossain said the size of the Bangladesh Fund has crossed the Tk 17 billion mark.

"The unit holders have so far received dividends worth around Tk 8 billion from the fund. So, the fund's contribution is not insignificant," he added.

The Bangladesh Fund is being managed by the ICB Asset Management Company Ltd.

ICB has been managing the country's largest-ever ICB Unit Fund whose approximate size is Tk 50 billion.

It was floated in April 1981 for mobilising savings through sale of its units to small investors and investing the funds in marketable securities.

Many senior citizens have units of the oldest unit fund, which has been distributing lucrative dividends year after year.

The sale of the units, however, has been stopped for long as per the condition of a development agreement, signed with the Asian Development Bank.

ICB Unit Fund's existing unit holders can sell their units to ICB, but nobody is allowed to buy units of the fund.

Instead of receiving dividends, unit holders of the fund are allowed to receive CIP (cumulative investment plan) certificates against their dividends.

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