Over the last decade, the Bangladesh capital market has grown rapidly in size and volume through the efforts of regulators, local exchanges, brokerages, merchant banks and other institutions. Yet the nature and composition of this growth has given rise to some structural problems, such as excessive volatility, speculation based investing, and unusual churn. One of the most effective solutions to these structural issues is by increasing increased participation of mutual funds in our capital markets … firstly, mutual funds by virtue of being managed by professionals with the right expertise usually invest on the basis of fundamental research and protect such investments from catastrophic loss through proper risk-management. Thus, mutual funds “invest” rather than “speculate” and can play a vital role in institutionalizing the market and act as a counterweight to excessive market volatility and manipulation. Secondly, mutual funds pool investment capital from thousands of retail investors and institutions that are not market specialists; by doing so mutual funds can bring retail investors’ funds under an institutional umbrella and thereby protecting these small investors from excessive volatility and speculation. Realizing the vital role that mutual funds can play in improving the capital market efficiency, Janata Bank Limited, has come forward and decided to sponsor First Janata Bank Mutual Fund. Having successfully launched merchant banking operations in March 2009, Janata Bank has built significant exposure to our stock market. The Bank strongly believes that the Bangladeshi stock market is entering a new growth phase, with healthy dynamics in both the demand and supply sides, and that mutual fund sponsorship offers the bank a responsible and profitable way of participating in this growth; the First Janata Bank Mutual Fund is the result. In this endeavor, First Janata Bank Mutual Fund has chosen two trusted partners with successful track record in the Bangladeshi mutual fund industry: RACE Management PCL as the Fund Manager and the Investment Corporation of Bangladesh (ICB) as the Trustee and Custodian of the Fund.
Since 2006, a number of factors have increased the popularity of stock market investing among Bangladeshi retail investors, including: rising income, low interest rates in traditional bank savings accounts, large stock investment gains, and increased media coverage. This exponential increase in demand is reflected in the 9x growth in average daily trading volume in the stock market during the last 2 years from Tk. 200 crores in 2006-07 to its current Tk. 1900 crores. Despite this significant growth in investor participation in the Bangladeshi stock market, and the demand for professionally managed investment vehicles, the domestic mutual fund industry has not responded with adequate supply. With only 26 individual funds to choose and about Tk. 2,500 crores in funds under management, the mutual fund industry has been slow to respond to current capital market realities and comprises only a small percentage of the total stock market investments. As a
result, existing mutual funds in the market are trading at significant premium to their NAVs while the recent launches have been significantly oversubscribed. To fulfill this large unsatisfied demand for mutual fund investments in Bangladesh, Janata Bank is floating the First Janata Bank Mutual Fund. In this endeavor, Janata Bank has appointed RACE Management PCL to be the Fund Manager; RACE Management has a successful track record in the Bangladesh stock market having achieved the largest private Asset Management Company in terms of funds under management in Bangladesh landmark within a little more than year.
Generally investment in mutual funds enjoys some additional advantages compared to investments made directly in other securities of the capital market. Investors of this mutual fund should be able to enjoy the following advantages.
First Janata Bank Mutual Fund has been constituted through a Trust Deed entered into between
Janata Bank Limited and Investment Corporation of Bangladesh on January 28, 2010 under the Trust
Act, 1882 and Registration Act, 1908.
The Fund was registered by the SEC on February 9, 2010 under the সিকিউরিটিজ ও এক্সচেঞ্জ কমিশন (মিউচ্যুয়াল ফান্ড) বিধিমালা, ২০০১।
The Fund is a closed‐end mutual fund of 10 (Ten) years. As per BSEC’s Directive No BSEC/CMRRCD/2006-157/210/Admin/83, dated October 02, 2018, the tenure of the fund may be increased up to another 10 years, established with a view to broaden the base of investment and develop the capital market.
The Trust Deed also provides the flexibility to the unit-holders to extend the tenure of the fund
beyond the initial 10 years.