BSEC to probe unusual spike in mutual fund prices

The Bangladesh Securities and Exchange Commission (BSEC) on Tuesday formed an inquiry committee to investigate the recent and unusual price hike of mutual funds stock over the last two weeks.

The prices of all 37 listed mutual funds had gone up irrationally.

Although investors mostly aim for short-term profit, an extensive booking spree caused most of the funds to gain sharply in the recent rally.

“This has prompted the commission to launch an investigation,” said Mohammad Rezaul Karim, executive director and spokesperson of the BSEC.

The inquiry committee, which will be led by BSEC Deputy Director Md Wahidul Islam, was asked to submit a report within 30 working days.

It will investigate possible allegations of insider trading, price manipulation and securities violations, Karim said.

Sources at the commission said that the committee primarily will look into five mutual funds: CAPM IBBL Islamic Mutual Fund, SEML IBBL Shariah Fund, Vanguard AML Rupali Bank Balance Fund, NCCBL Mutual Fund-1 and Prime Finance First Mutual Fund.

Recently, the BSEC chairman had asked investors to put money in mutual funds.

Mutual fund asset to gross domestic product (GDP) in Bangladesh, which is only 0.53 per cent, is the lowest among emerging economies.

The ratio is 11 per cent for India, followed by 32 per cent for Malaysia, 1.5 per cent for Pakistan, 73 per cent for the UK and 118 per cent for the US. The global average is 62 per cent. 

Recently, the BSEC recommended bringing about transparency in mutual funds by making it mandatory for every portfolio-related statement to be made public.

In line with the directive, a mutual fund, asset manager, trustee, custodian and sponsor will make disclosure or submit documents as and when called upon to do so by the commission.

In the directive, the regulator said that a mutual fund must send a complete statement of portfolios of a scheme to all unitholders before the expiry of 30 days from the end of each quarter, as well as uploading them on its website.

The directive will increase transparency and ensure good governance in mutual funds. It will also be easier to make decisions on investment easier for investors, stakeholders said.