Mutual Fund is an investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. Mutual funds are operated by Asset Managers, who invest the funds capital and attempt to produce capital gains and income for the fund’s investors. A mutual fund portfolio is structured and maintained to match the investment objectives stated in its prospectus.
One of the main advantages of mutual funds is that they give small investors access to professionally managed, diversified portfolios of equities, bonds and other securities, which would be quite difficult, if not impossible, to create with a small amount of capital. Each shareholder participates proportionally in the gain or loss of the fund.
Following are some important aspects of Mutual Funds:
- Tax Exemption for Institutional Investment: Gain Tax is fully waived for Investment by the Institution in Mutual Fund from current Budget Year.
- Dividend Reinvestment: As per the latest Mutual Fund rules, Mutual Fund can also Re-invest the dividend in the form of Stock Dividend. Also, minimum 70% of Mutual Fund income should be paid to investors as dividend.
- Wider Ticket Size: Ticket size of Mutual Fund is much wider compared to equity and bond listed in Capital Market.
- Shorter Lock-in period: Lock-in is 6(six) Months from the date of listing of Mutual Fund for the Pre-IPO placement.
- Standard Fund Management: Coordinated and experienced management of the fund by the efficiant team members of Asset Management Company.
- Risk adjusted return: Asset Manager always cares about the risk and their main objective is risk adjusted return.
- Favorable Price level: Due to recent Capital Market slump, price level of different listed equity is much lower and in some cases undervalued which createsa favorable situation for investment.
Vanguard Asset Management Limited as an Asset Management Company in Bangladesh is mandated to launch Mutual Funds for providing sustainable returns to our investors by minimizing the risk in volatile market. Currently we are in the process of launching two Closed-end Mutual Funds, namely, ‘VANGUARD AML BD FINANCE MUTUAL FUND ONE’ and ‘VANGUARD AML RUPALI BANK BALANCED FUND’ involving a total amount of BDT 4000 million. The main objective of our Mutual Funds is facilitating investors’ access to professionally managed diversified portfolios of equities, bonds and other securities so that each of them may take part proportionally in the gain or loss of the fund.