Research Project On

Asset Management Company (AMC) in Bangladesh AIMS of Bangladesh Limited & Mutual Fund Management of AMC

Course Code: MBA 700 Course Title: Research Project

Prepared By
Name: Shariful Haque ID No: 11415119 MBA, Baridhara, UITS

Prepared For
School of Business

[A Research Submitted in partial Fulfillment of the MBA Program in the University of Information Technology and Sciences (UITS)]

Date of Submission: 27th May' 2012

UNIVERSITY OF INFORMATION TECHNOLOGY & SCIENCES (UITS)

Date: 27th May 2013 Md. Nazmul Hasan Assistant Professor School of Business University of Information Technology and Sciences(UITS). Baridhara, Dhaka

Subject: Submission of the Research Paper.

Sir, In the following pages, I have presented a report about "Asset Management Company (AMC) in Bangladesh and their Mutual Fund Management", which is submitted to fulfillment of the requirements for the M.B.A. program. It was both a pleasure and a challenge as well for work under your direct supervision and I can never repay my indebtedness to you. In preparing this report, I have tried my level best to include all the relevant information to make the report informative and comprehensive.

Lastly, I would like to express my sincere appreciation and thanks to your help while preparing the report. I shall be glad to answer any queries that you may have in this regard.

Sincerely Yours, Shariful Haque ID# 11415119 MBA, Baridhara, UITS.

ACKNOWLEDGEMENT

I would like to thank the almighty Allah for giving me the patience and the ability to work hard. First and foremost to my respectable teacher, Md. Nazmul Hasan for his invaluable guidance, encouragement and suggestions throughout period of my research work without which it would have not been possible complete and submit this report. I am deeply indebted to my instructor Md. Nazmul Hasan. His invaluable guidance, advice and experience have taught me much and a result my experience has been many folds better than it might have been. I would also like to thanks to entire respondent who unconditionally helped me and supported me throughout the survey. With their contribution this report would not be possible. My deepest thanks go to Mrs. Laila Mahmuda Shilpi, Head of Operation who gave me guide line, knowledge support and helps to collect materials that I needed to complete this report. Without their help, it was impossible to complete my research report. Lastly, I would like to thank to my entire Family for their extreme care, support and Cooperation during the last months during the report.

EXECUTIVE SUMMARY
Asset management activities have been widely practiced all over the world for very long time. It works as a prime facilitator for the smooth continuation of capital market; by the administration of new issues and through preservation of the interest of investors. Fund managers thus contribute to the development of economy through speeding up various activities pertaining to capital market. In Bangladesh, their activities started its way after the independence by the emergence of Investment Corporation of Bangladesh (ICB). Through the pioneering role of ICB, activities grew gradually with time. So far, Asset management company (AMC) of Bangladesh, carries out four types of activities--Issue Management, Underwriting, Portfolio Management and Corporate advisory service. Among the leading asset management company of recent time, AIMS OF BANGLADESH is the first privet fund manager which has established a prominent position. The report has been organized within the frame of Aims Of Bangladesh Ltd. to give a light to the asset management companys practices of Bangladesh. The report has been designed through gathering real life experience by the researcher; as a prerequisite for the fulfillment of internship program. Asset Management Company (AMC) has started its journey in March 10, 1996. The client is the focal point of all its activities. The organization is committed to provide their client with excellent, innovative and fast solutions across all business segments. The report endeavors at showcasing the overview of asset management operations of AIMS along with Mutual Fund managing in Bangladesh with underlying problems and prospects. The development of AMC in Bangladesh and its common practices has also come to the light and all the issues have been coordinated to illustrate the overall theme of Asset & Investment Management in Mutual fund. The report is prepared with the help of primary data sources (practical experience and informal sessions and interviews) as well as some secondary data collected from journals, reports and websites.

Asset Management Companies boasts up a broadly diversified investment profile. This enables the investors to invest in full range of services, they expect from a leading financial institution. At the beginning, general rules and conditions along with the capital requirements of Asset Management Company (AMC) of Bangladesh has been discussed. The asset management division has been segregated in four different wings fund management, issue management, underwriting and portfolio management. In issue management wing, the firm helps preparing prospectus, pricing issue of shares, getting approval from the appropriate authorities, arranging underwriters, bankers to the issue, stock exchanges and other activities. The total number of Mutual Fund managed is 41 so far. Another emerging sector is merchant bank and its portfolio management where merchant bankers give their expert opinion to the investors for taking right investment decisions. The work procedures of asset management in AMC is maintained by some sophisticated software (for accounting vouchers and database management) and through the help of brokerage house.

The prospect of Asset Management Company (AMC) is booming in Bangladesh now days. From the yearwise analysis from 1996 to 2013, it has been observed that the fund management has been growing significantly except a bit slowdown in 2008. The total listed companies in Dhaka Stock exchange is only 412 whereas total number of entities is more than one lac twenty thousand in our country. So, it has a very promising future. According to the public issue rules of Securities and Exchange Commission (SEC), a company has to operate at least fifty percent underwriting of the total issue volume. So, it underlies a great prospect for underwriting as well. The asset management division on fund management is in comparative analysis of earnings to its unit. Besides the impressive uplift of asset management sector in Bangladesh, it is not free from drawbacks. The problems of AMC have grown rapidly with the advancement of this sector. A major problem arises from the high flotation cost which makes it difficult for small firms to enter into the capital market. More difficulties arise from lack of management and coordination of regulating authority, lack of formal debt market and proper infrastructural support, insufficient research and professional portfolio management service. The capital market is regulated without structured policy support and the government and banks has not been in a smooth stage with changing interest rates in both loans and deposits. Moreover, speculative manners and rumor-based trading are hampering the mechanism of capital market with imbalanced growth. On the light of the problems of merchant banking sector of Bangladesh, the underlying problems of AMC have been analyzed. The main problems arise from insufficient human resources and modern technologies to operate the activities in a more smooth fashion. It has not gained enough financial capacity to attract more expert professionals as financial analysts and to arrange foreign road shows to attract individual and institutional non-resident Bangladeshi (NRB) investors. Moreover, employees feel lack of empowerment while making important decisions which can be self-devastating for the firm.

The report has been focused to present the important issues of merchant banking sector of Bangladesh within the boundary of Asset Management Company (AMC) Limited. It has not been possible to present all the factors along with problems and prospects within this limited time frame and it needs more expertise to analyze the real scenario. Sincere effort of the researcher is given and the success of the report is embedded on the proper fitting of its objectives in the view of the interest group.

TABLE OF CONTENTS
1 2 Executive Summary Introduction
Statement of the Purpose Significance of the Study Performance Measures Used in the Study Research Objectives Research Design Data Sources Data Analysis and Evaluation What is Asset Management Company (AMC)? Research of Asset Management dos and donts : A strategic approach to asset management: Most Common Problems with Asset Management: Lessons in Asset management Asset Management in volatile economy Company Vision Company Mission Company Goal Strategic Objectives Core Values Business Principles Products & Services Risk Management Company Organogram SWOT Analysis Fund Highlights What is mean by mutual fund? Concept of mutual funds Historical Aspect Bangladeshs Scenario of Mutual Fund Advantages of Mutual Funds Drawbacks of Mutual fund Competitive Advantages in investing in the Mutual Fund AIMS of Bangladesh Limited ICB Asset Management Company Limited RACE Management PCL LR Global BD LTD 1-4

Methodology

5-6

Asset Management Company (AMC) 4 Background of the Study

7 - 17

Organizational Overview 5
AIMS of Bangladesh Limited

18 - 38

Mutual Fund Management of AMC 6

39 - 45

Comparative Analysis on Mutual Fund 7 Management (Among Four AMC of Bangladesh) Simple Survey Analysis And Findings Policies and Regulations of AMC

46 - 64

8 9

65 - 86 Investment objectives and policy for AMC Transaction policy Investment restrictions Investment management Policy Additional measures to improve profitability

87 - 97

10 11 12 13 14

Findings Limitations Recommendation Conclusions Bibliography & Annexure

98 99 99 100 102 - 107