Another close-ended mutual fund -- CAPM BDBL Mutual Fund-1 – nears conversion or liquidation as its 10-year term will end in January.
The trustee has called a special meeting of unitholders on October 7 at BDBL Bhaban in the capital, where they will vote to determine the course of action after the maturity of the fund, according to a regulatory filing on Monday.
The record date for the meeting has been set for September 15, while trading in the fund’s units on the stock exchanges will remain suspended from September 16 until further notice, said the trustee of the fund, Investment Corporation of Bangladesh.
The fund is managed by CAPM (Capital & Asset Portfolio Management) Company and will complete its tenure on January 12, 2027.
Under the amended Mutual Fund Rules 2025, close-ended funds must be redeemed at maturity as tenure extensions are no longer allowed, a corrective move to change course from past mistakes. However, such funds may be converted into open-ended schemes if at least three-fourths of unitholders, based on ownership share, approve the move.
Akramul Alam, head of research at Royal Capital, said unitholders would benefit in both ways – conversion or liquidation.
He explained that redemption would allow unitholders to recover their investments at the current net asset value (NAV) of the fund, a relief for them, especially when units of listed mutual funds were trading at heavy discounts in the secondary market.
On the other hand, if the fund is converted into an open-ended scheme, unitholders will have the scope to remain invested in the new scheme or exit from it.
Mr Alam added that unitholders can surrender open-ended fund units any day, and the asset manager is bound to liquidate the underlying assets of the units and pay cash back to investors as per the current net asset value.
Modest return for investors
CAPM BDBL Mutual Fund-1 was listed on the stock exchanges in January 2017 with an initial size of Tk 500 million.
As of Monday, the fund’s total net assets stood at Tk 456.28 million at current market value and Tk 548.11 million at cost value after accounting for all assets and liabilities.
Investors who put money into the fund in 2017 and have held their units until conversion or redemption are set to receive relatively modest returns.
The fund distributed cash dividends ranging from 5 per cent to 13 per cent between 2018 and 2023. Its NAV currently stands at Tk 9.10 per unit, which is 9 per cent lower than the face value of Tk 10.
Considering dividend income and the current NAV, the average annual return for unitholders comes to around 4.33 per cent, significantly below the rate of inflation over the period.
Following the disclosure, the fund’s unit price fell 5.94 per cent to Tk 9.50 on the Dhaka Stock Exchange on Monday.
If converted into an open-ended scheme, CAPM BDBL Mutual Fund-1 will become the fourth closed-end mutual fund to complete such a conversion. Earlier, Southeast Bank 1st Mutual Fund, NLI First Mutual Fund and SEML Lecture Equity Management Fund were converted into open-ended schemes.
Meanwhile, Asian Tiger Sandhani Life Growth Fund and Vanguard AML BD Finance Mutual Fund One were liquidated as decided by the majority of the unitholders.
