Topic: Mutual Fund

Prepared for Prepared by

Leo Vashkor Dewri MD Hafizur Rahaman
Senior Lecturer, 2018-1-0-135
East West University Asifur Rahman Khan
2019-1-10-286
Alamgir Muhammed Sadman Hossain
2019-2-10-040
Anika Sultana Munne
2019-2-10-100
Muhammad Sajad Islam
2019-3-10-088
Shoaib Ahsan Chowdury
2019-3-10-115

Submission Date
5th September, 2023
 Mutual Fund of
Bangladesh

Term Paper
On

Mutual Fund of Bangladesh

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LETTER OF TRANSMITTAL

5th, September, 2023

Leo Vashkor Dewri,

Senior Lecturer,

East West University

Subject: Submission of term paper on “Mutual Fund”

Dear Sir,

We have prepared our final term paper of FIN-425 course on “Mutual Fund”, which we are
submitting with this letter. It was an energizing experience working in such an activity. We are
confident that, this term paper will helped us to understand the overall knowledge of Mutual
Fund. We have tried our best to follow the guidelines in preparing this paper. We have presented
what we do believe to be most important information to make this term paper as specific &
coherent as possible.

We expect that this report will fulfill your requirements. We hope our effort would satisfy you.

Yours sincerely,

MD Hafizur Rahaman
Asifur Rahman Khan
Alamgir Muhammed Sadman Hossain
Anika Sultana Munne
Muhammad Sajad Islam
Shoaib Ahsan Chowdury

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ACKNOWLEDGEMENT

Firstly, we would like to thank Almighty Allah who provided us knowledge, energy & skills to
get opportunities & to increase our knowledge & experience by completing this project.

Secondly, we especially thank our University (FIN- 425) course Instructor Leo Vashkor Dewri,
who guided us in every steps & aspects of this report so that we can complete it successfully.

And we are thankful to our classmates and friends who always supported and helped in finding
the information.

Finally, we would like to thank our entire group who gave their time, and effort to make the
paper finish successfully.

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Methodology:

The study is based upon the secondary information we extracted from various journals, articles
and working papers, mostly the facts and views. We also collect data through internet. The
findings and observations are solely based on the first hand information extracted from the
officials of the asset management companies.

Limitations:

 There is lack of both primary and secondary data as it is a first time study on the given
topic.
 Information’s of all the MF are not available and due to performance problems they
weren’t indication much.
 Very difficult to get proper data DSE.

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Table of Contents

Introduction:..............................................................................................6

Overview of Bangladeshi Mutual Fund....................................................8

Statistical Presentation of Mutual Funds in Bangladesh:.......................11

Shortcomings of Mutual Fund................................................................19

The Prominent shortcomings of Mutual funds.......................................20

Conclusion..............................................................................................27

Recommendation:...................................................................................28

References...............................................................................................29

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Introduction:
A mutual fund is a trust consists of savings from the many distant investors and put them in
securities like stocks, bonds, and short-term money market and commodities like gold. This trust
is managed by Professionals. The investors of mutual fund share common objective and put their
money in different the asses according to the fund’s investment objective. The mutual fund gives
an opportunity to the retail investors gain the advantage of professional financial control. A
mutual fund is a mechanism to pull out savings from the retail sector. Their money is directly
handled by the professional fund manager or indirectly pursued by an index or industry. The
funds are spread into various sectors to avoid potential loss. Slimming Down the effort of
individual investors, they offer a smart way to manage their savings without paying high fees or
requiring constant attention. Mutual fund facilitates and takes traditional and complex investment
decision on behalf of investors who lack the time and knowledge. Investors trust the portfolio
manager to make those crucial investment choices by investing in a mutual fund.

Investment Corporation of Bangladesh (ICB) launched by government in 1980 was the first ever
Mutual Funds for the sake of investors and of the capital market. ICB subsequently offered a
series of closed-end mutual funds. The first private sector to take initiative of organizing a
mutual fund was Asset & Investment Management Services of Bangladesh Limited (AIMS) in
1999.Though the mutual fund industry grew over time there has only been close ended fund
since the beginning of the mutual funds. The country’s first ever open-end mutual fund hit
market in the first quarter of 2010, expanding the orbit of stock market and providing
shareholders a very useful and convenient investing vehicle. Prime Finance Asset Management
Company Limited (PFAMCL) float the mutual fund, with initial size of Tk500 million.
Performance evaluation of mutual funds is important for the investors and portfolio managers.

In this term paper we tried to analyze the performance of the growth on the basis of return and
risk evaluation. The analysis was achieved by assessing various each Mutual funds risk and
return on dividend payout ratio, capital appreciation and finally standard deviation.

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Overview of Bangladeshi Mutual Fund:

There is a very small market for Mutual Funds having low issued capital in Bangladesh where
Mutual Funds fall into two categories: open-end funds and closed-end funds. Among 24 closed-
end Mutual Funds listed in DSE, eight are managed by the Investment Corporation of
Bangladesh (ICB), eight by ICB Asset Management Co. Ltd. (a subsidiary of ICB), one by
Bangladesh Shilpo Rin Shangstha (BSRS) and the remaining seven are managed by the private
sector. All of the funds issued in Bangladesh up to 2009 do not commensurate properly to the
theoretical framework of Mutual Fund. Notionally, Mutual Fund is formed and operated like a
company where shares are issued to investors to raise fund for the investment in different sectors,
comprising money market and capital market. But in Bangladesh for the Mutual Funds from 1st
ICB to 1st BSRS, various outstanding investments of the ICB were converted into different
schemes and came to the market in the form of Mutual Fund through the issuance of shares to
general investors. This was an off the cuff step with the purpose of creating a Mutual Fund
market in the country. These funds have been listed separately in appendices to present the
overall status of Mutual Fund industry in Bangladesh. So far all the Mutual Funds have been
issued at face value, price of Mutual Fund certificates after IPO is determined on the Stock
Exchanges through interaction of supply and demand.

Investment Corporation of Bangladesh (ICB) launched by government in 1980 was the first ever
Mutual Funds for the sake of investors and of the capital market. The first private sector to take
initiative of organizing a mutual fund was Asset & Investment Management Services of
Bangladesh Limited (AIMS) in 1999. Though the mutual fund industry grew over time there has
only been close ended fund since the beginning of the mutual funds. The country's first ever
open-end mutual fund hit market in the first quarter of 2010, expanding the orbit of stock market
and providing shareholders a very useful and convenient investing vehicle. Prime Finance Asset
Management Company Limited (PFAMCL) float the mutual fund, with initial size of Tk500
million. In this fiscal year total market capitalization of mutual fund was Tk. 3595.5 crore; 32
percent higher than that of previous fiscal year. In general the investment in mutual fund is

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normally assumed to be safe investment due to volatility in capital market but the market
capitalization of mutual fund was comparably lower than other sector.

Theoretically the price of a Mutual Fund certificate can change daily. There are also three open-
end Mutual Funds of which one is Year-end Key statistics of closed-end Mutual Funds from
2007 to 2009 are given in appendices. From 1st ICB to 1st BSRS Mutual Fund market value has
increased from 2007 to 2008 and from 2008 to 2009 with the exception for 4th ICB Mutual Fund
in 2008(90.71% decrease in market value). Among the Mutual Funds in table 1, the same fund
has experienced the highest price hike in 2009 in comparison to 2008. For Aims First to ICB
AMCL Mutual Fund largest change (33.39% decrease) in market value is present for Grammen
Mutual Fund,Scheme two in 2009 from 2008. Both the EPS and DPS remained same for all the
funds, from 1st ICB to 1st BSRS Mutual Fund (Appendices; Table 1). The P/E ratio for all funds
is ranging from 10% to 40 % and the same picture exists for the ratio of market price to NAV;
funds were traded at an average of 3.75 times to their net asset value (NAV) where all of which
ultimately resembles the growing demand of Mutual Fund in the market.

For the funds in appendices the DPS and EPS both have kept changing with an increasing trend
for the years presented. The P/E ratio for all funds is ranging from 5% to 93 % and the ratio of
market price to NAV is on an average 3.5. It is evident from the tables that most of the Mutual
Funds are passing an increasing trend in market value but some funds (ICB AMCL Islamic MF
decreased 15.63%, ICB AMCL First NRB MF decreased 19.35% in 2008)

The price-earnings ratios show some excess in 2009 compared with the end of 2008 for all listed
Mutual Funds ranging from 15.22 to 95.69 (specially for the funds from ICB to BSRS)mainly
due to price augmentation of Mutual Funds. The picture is same for the ratio of market price to
net asset value (NAV) of all Mutual Funds in December 2009.

Although ICB is the major institutional player in the Mutual Fund market, the newly entered
privately managed Mutual Funds are performing relatively well in the capital market which owns
the highest share in terms of market capitalization among the issuers for the year 2009. The

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market prices of all Mutual Funds remain much higher than their face values reflecting the
investors’ confidence and their expectations of future price hikes. The reason is that, all the
earlier Mutual Funds were very small in size. Hence, the number of funds may be more for ICB,
but funds size is very small.

ICB,
12.08%

ICB AMCL,
25.03%
Private
Sector,
59.41%

BSRS,
3.47%

Issuer wise Market Capitalization for the year 2009

In Bangladesh perspective, the number of Mutual Fund is growing gradually as at the IPO phase
investors are profiting well. Since, investors are quite impressed by the marginal performance of
the Mutual Funds; they feel interest to put money in them in the secondary market. Therefore,
the consequence is clear. An emerging secondary market for Mutual Funds has been encouraging
investors of taking advantage properly, and thus making more and more investors positive
towards them. However, this small market of Mutual Funds is not happy at all at this moment. A
very serious but interesting debate has been looking for last few months regarding Mutual Funds
in Bangladesh. The SEC implemented revised Mutual Fund regulations on July 22, 2009 that
prohibited the closed end Mutual Funds from increasing the size of Mutual Funds through right
or bonus shares to increase their capital bases. After the writ petition from investors against this
amendment, The High Court on November 09, 2009 allowed Mutual Funds to raise their size by
issuing bonus and rights, without curbing the securities regulator's absolute power to determine
which funds would be eligible to expand the capital base although this verdict was suspended
hours after the announcement giving the SEC adequate time to appeal. (Barua, 2009)

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Statistical Presentation of Mutual Funds in Bangladesh:

SL Name of the Mutual Fund Year of Face Value Fund Size

Floatation
(TK in Crore)

Closed End Mutual Funds

01 1st ICB 1980 100 Tk 0.75

02 2nd ICB 1984 100 Tk 0.50

03 3rd ICB 1985 100 Tk 1.00

04 4th ICB 1986 100 Tk 1.00

05 5th ICB 1987 100 Tk 1.50

06 6th ICB 1988 100 Tk 5.00

07 7th ICB 1995 100 Tk 3.00

08 8th ICB 1996 100 Tk 5.00

09 1st BSRS 1997 100 Tk 5.00

10 ICB AMCL 1st 2003 100 Tk 10.00

11 ICB AMCL Islamic 2005 100 Tk 10.00

12 ICB AMCL 1st NRB 2007 100 Tk 10.00

13 ICB AMCL 2nd NRB 2008 100 Tk 100.00

14 AIMS 1st Guaranteed 2000 1 Tk 16.80

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15 Grameen Mutual Fund One 2005 10 Tk 17.00

16 Grameen Mutual Fund Two 2008 10 Tk 125.00

17 Prime Finance 1st 2009 10 Tk 20.00

18 EBL 1st 2009 10 Tk 100.00

19 ICB AMCL 2nd 2009 100 Tk 50.00

20 ICB Employees Mutual Fund 2010 10 TK.75.00

One:Scheme One
21 Trust Bank 1st 2010 10 Tk.200.00

22 Prime Bank 1st ICB AMCL 2010 10 Tk.100.00

23 DBH 1st 2010 10 Tk.120.00

24 IFIC Bank 1st 2010 10 Tk.120.00

25 Phoenix Finance 1st 2010 10 Tk.60.00

26 ICB AMCL 3rd NRB 2010 10 Tk 100.00

27 Janata Bank 1st 2010 10 Tk 200.00

28 GreenDelta 2010 10 Tk 150.00

29 Popular Life 1st 2010 10 Tk 200.00

30 IFIL 1st Islamic 2010 10 Tk.100.00

31 PHP 1st 2010 10 Tk.200.00

32 AIBL 1st 2011 10 Tk.100.00

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Open-End Mutual Fund

SL Name of the Fund Year of Floatation Initial Fund Size

(TK in Crore)

1 ICB Unit Certificate 1981 Tk 10.00

2 ICB AMCL Unit Certificate 2003 Tk 10.00

3 ICB AMCL Pension Holders Unit 2004 Tk 10.00

Certificate

4 Prime Financial Unit Fund 2010 Tk 20.00

Market capitalization of listed companies (% of GDP) in Bangladesh

Market capitalization of listed companies (% of GDP) in Bangladesh was last measured at 15.02
in 2012, according to the World Bank. Market capitalization (also known as market value) is the
share price times the number of shares outstanding. Listed domestic companies are the
domestically incorporated companies listed on the country's stock exchanges at the end of the
year. Listed companies does not include investment companies, mutual funds, or other collective
investment vehicles. This page has the latest values, historical data, forecasts, charts, statistics,
an economic calendar and news for Market capitalization of listed companies (% of GDP) in
Bangladesh.

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WORLD BANK INDICATORS - BANGLADESH - CAPITAL MARKETS

1990 2000 2010

Financing via international capital 0.0 0.0 [+]
markets (gross inflows; % of
GDP) in Bangladesh
S&P Global Equity Indices (annual % 28.5 37.6 [+]
change) in Bangladesh
Market capitalization of listed 321000000.0 1185950000.0 15683336064.7 [+]
companies (US dollar) in Bangladesh
Market capitalization of listed 1.1 2.5 15.6 [+]
companies (% of GDP) in Bangladesh
Listed domestic companies; 134.0 221.0 209.0 [+]
total in Bangladesh
Stocks traded; total value (US 6000000.0 767560000.0 14692918138.6 [+]
dollar) in Bangladesh
Stocks traded; total value (% of 0.0 1.6 14.6 [+]
GDP) in Bangladesh
Stocks traded; turnover ratio 1.5 74.8 129.2 [+]
(%) in Bangladesh

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SECTOR WISE PERFORMANCE

In FY 2010-11, there was an upward trend in terms of sector wise performance; all sectors
experienced an upward trend with a few exception. On the basis of market capitalization of
ordinary shares of companies listed with DSE, total market capitalization of banking sector in
FY 2010-11 was Tk. 68061.9 crore which was 5.67 percent higher than that of previous fiscal
year. In this fiscal year total market capitalization of mutual fund was Tk. 3595.5 crore; 32
percent higher than that of previous fiscal year. In general the investment in mutual fund is
normally assumed to safe investment due to volatility in capital market but the market
capitalization of mutual fund was comparably lower than other sector. In FY 2010-11 the market
capitalization of fuel and power sector was Tk. 28931.4 crore which was 4 percent lower than
that of previous fiscal year on the other hand the market capitalization growth of insurance sector
accumulated 32.28 percent in terms of previous fiscal year. But real sector components of
economy such as jute industry although gained a positive market capitalization growth but the
total market capitalization were lower and in last fiscal year it was only Tk. 79 crore.
Telecommunication sector started it activities in capital market in FY 2009-10 with a total
market capitalization of Tk. 31826.6 crore. But in the following fiscal year, the market
capitalization of this sector dropped down about 30.46 percent and became Tk. 22131.4 crore.

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Sector-wise contribution in market capitalization (FY 1995-96 to FY 2010-11)

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Sector Wise Performance in FY 1995-96

Sector Wise Performance in FY 2001-02

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Sector Wise Performance in FY 2011-12

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Shortcomings of Mutual Fund:

Mutual fund (MF) is a very useful investment mechanism in a capital market. A developed
capital market consists of varieties of investment instruments and MF is one of them. But the
share of mutual funds in Bangladesh's capital market is very low. The market is fully equity-
based and there is little scope to introduce any new financial instrument. That's why a rapid
development has not happened in the MF sector all. But MF can be a good investment alternative
in this undiversified market. When you invest in a mutual fund you place your money in the
hands of a professional manager. The return on your investment depends heavily on that
manager’s skill and judgment. Mutual funds offer advantages and disadvantages, which are
important for you to consider and understand before you decide to buy. Here we explore some of
the short comings of mutual funds.

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The Prominent shortcomings of Mutual funds:

i. Fluctuating Returns

Mutual funds are like many other investments without a guaranteed return. There is always the
possibility that the value of your mutual fund will depreciate. Unlike fixed-income products,
such as bonds and Treasury bills, mutual funds experience price fluctuations along with the
stocks that make up the fund. When deciding on a particular fund to buy, you need to research
the risks involved - just because a professional manager is looking after the fund, that doesn't
mean the performance will be stellar.

Another important thing to know is that mutual funds are not guaranteed by the U.S.
government, so in the case of dissolution, you won't get anything back. This is especially
important for investors in money market funds. Unlike a bank deposit, a mutual fund will not be
FDIC insured.

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01. Fluctuating Returns

02. Diversification

03. Cash, Cash and More Cash

04. Costs

05. Misleading Advertisements

06. Evaluating Funds

07. No Insurance

08. Dilution

09. Fees and Expenses

10. Poor Performance

11. Loss of Control

12. Trading Limitations

13. Size

14.Mutual funds are subject to market risk

15. No guarantee of returns.

16. Mutual Funds Have High Sales Charges

17. Selecting right financial securities is not easy

18. Cost management not proportional to performance

19. Unethical practices may creep in

20. Mutual Funds Lack Liquidity

Figure: Shortcomings of Mutual funds

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ii. Diversification

Although diversification is one of the keys to successful investing, many mutual fund investors
tend to over diversify. The idea of diversification is to reduce the risks associated with holding a
single security; over diversification (occurs when investors acquire many funds that are highly
related and so don't get the risk reducing benefits of diversification.

At the other extreme, just because you own mutual funds doesn't mean you are automatically
diversified. For example, a fund that invests only in a particular industry or region is still
relatively risky.

iii. Cash, Cash and More Cash

As you know already, mutual funds pool money from thousands of investors, so everyday
investors are putting money into the fund as well as withdrawing investments. To maintain
liquidity and the capacity to accommodate withdrawals, funds typically have to keep a large
portion of their portfolio as cash. Having ample cash is great for liquidity, but money sitting
around as cash is not working for you and thus is not very advantageous.

iv. Costs

Mutual funds provide investors with professional management; however, it comes at a cost.
Funds will typically have a range of different fees that reduce the overall payout. In mutual funds
the fees are classified into two categories: shareholder fees and annual fund-operating fees.

The shareholder fees, in the forms of loads and redemption fees are paid directly by shareholders
purchasing or selling the funds. The annual fund operating fees are charged as an annual
percentage - usually ranging from 1-3%. These fees are assessed to mutual fund investors
regardless of the performance of the fund. As you can imagine, in years when the fund doesn't
make money these fees only magnify losses.

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v. Misleading Advertisements

The misleading advertisements of different funds can guide investors down the wrong path.
Some funds may be incorrectly labeled as growth funds, while others are classified as small-cap
or income. The SEC requires funds to have at least 80% of assets in the particular type of
investment implied in their names. The remaining assets are under the discretion solely of the
fund manager.

The different categories that qualify for the required 80% of the assets, however, may be vague
and wide-ranging. A fund can therefore manipulate prospective investors by using names that are
attractive and misleading. Instead of labeling itself a small cap, a fund may be sold under the
heading growth fund. Or, the "Congo High-Tech Fund" could be sold with the title "International
High-Tech Fund".

vi. Evaluating Funds

Another disadvantage of mutual funds is the difficulty they pose for investors interested in
researching and evaluating the different funds. Unlike stocks, mutual funds do not offer investors
the opportunity to compare the P/E ratio, sales growth, earnings per share, etc. A mutual fund's
net asset value gives investors the total value of the fund's portfolio less liabilities, but how do
you know if one fund is better than another?

Furthermore, advertisements, rankings and ratings issued by fund companies only describe past
performance. Always note that mutual fund descriptions/advertisements always include the
tagline "past results are not indicative of future returns". Be sure not to pick funds only because
they have performed well in the past - yesterday's big winners may be today's big losers

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vii. No Insurance

Mutual funds, although regulated by the government, are not insured against losses. The Federal
Deposit Insurance Corporation (FDIC) only insures against certain losses at banks, credit unions,
and savings and loans, not mutual funds. That means that despite the risk-reducing
diversification benefits provided by mutual funds, losses can occur, and it is possible (although
extremely unlikely) that you could even lose your entire investment.

viii. Dilution

Although diversification reduces the amount of risk involved in investing in mutual funds, it can
also be a disadvantage due to dilution. For example, if a single security held by a mutual fund
doubles in value, the mutual fund itself would not double in value because that security is only
one small part of the fund’s holdings. By holding a large number of different investments,
mutual funds tend to do neither exceptionally well nor exceptionally poorly.

ix. Fees and Expenses

Most mutual funds charge management and operating fees that pay for the fund’s management
expenses (usually around 1.0% to 1.5% per year for actively managed funds). In addition, some
mutual funds charge high sales commissions, 12b-1 fees, and redemption fees. And some funds
buy and trade shares so often that the transaction costs add up significantly. Some of these
expenses are charged on an ongoing basis, unlike stock investments, for which a commission is
paid only when you buy and sell.

x. Poor Performance

Returns on a mutual fund are by no means guaranteed. In fact, on average, around 75% of all
mutual funds fail to beat the major market indexes, like the S&P 500, and a growing number of
critics now question whether or not professional money managers have better stock-picking
capabilities than the average investor.

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xi. Loss of Control

The managers of mutual funds make all of the decisions about which securities to buy and sell
and when to do so. This can make it difficult for you when trying to manage your portfolio. For
example, the tax consequences of a decision by the manager to buy or sell an asset at a certain
time might not be optimal for you. You also should remember that you trust someone else with
your money when you invest in a mutual fund.

xii. Trading Limitations

Although mutual funds are highly liquid in general, most mutual funds (called open-ended funds)
cannot be bought or sold in the middle of the trading day. You can only buy and sell them at the
end of the day, after they’ve calculated the current value of their holdings.

xiii. Size

Some mutual funds are too big to find enough good investments. This is especially true of funds
that focus on small companies, given that there is strict rules about how much of a single
company a fund may own. If a mutual fund has $5 billion to invest and is only able to invest an
average of $50 million in each, then it needs to find at least 100 such companies to invest in; as a
result, the fund might be forced to lower its standards when selecting companies to invest in.

xiv. Subject to market risk

Mutual fund investments are subject to market risk involved. This caution (warning) can be
checked with the offer document where it is clearly mentioned as follows:

"Mutual Fund investments are subject to market risks. Please read the offer document carefully
before investing."

xv. No guarantee of returns

Mutual funds do not give any guarantee of the returns for the investments made in its various
schemes.

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xvi. Mutual Funds Have High Sales Charges

Should a sales charge be included in the disadvantages of mutual funds list? It’s difficult to
justify paying a sales charge when you have a plethora of no-load mutual funds. But, then again,
it’s difficult to say that a sales charge is a disadvantage of mutual funds when you have
thousands of mutual fund options that do not have sales charges. Sales charges are too broad to
be included on my list of disadvantages of mutual funds.

xvii. Selecting right financial securities is not easy

It's difficult task for a mutual fund manager to select appropriate and suitable financial securities
for investment to generate higher returns.

xviii. Cost management not proportional to performance

Mutual fund managers are one of the highest-paid executives in the finance domain.
Furthermore, the fee paid to the Asset Management Company (AMC) is no way related to the
performance of these funds.

xix. Unethical practices may creep in

Mutual fund managers may follow unethical (corrupt) practices to boost the performance of the
various fund-related schemes.

xx. Mutual Funds Lack Liquidity

How fast can you get your money if you sell a mutual fund as compared to ETFs, stocks and
closed-end funds? If you sell a mutual fund, you have access to your cash the day after the sale.
ETFs, stocks and closed-end funds require you to wait three days after you sell the investment. I
would call the “lack of liquidity” disadvantage of mutual funds a myth. You can only find more
liquidity if you invest in your mattress.

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Conclusion:
This paper images an overview of the Bangladesh Mutual Fund industry and investigates the
Mutual Fund. Though to make any definitive solution ten year is very short period, the
performance of these funds cannot be considered better relative to that of the market portfolio.
The analyzed Mutual Funds could not outperform the market except in terms of Treynor and
Jensen model where the systematic risk measure, beta of the portfolio has its problem of
relevancy in case of measurement of performance analysis. Non-identical rating and low
correlation of funds with market suggest that none of the Mutual Funds are fully diversified. In
case of performance attribution, market-timing ability of the fund managers were absent for the
studied periods for the selected funds which says that fund manager were not active in changing
the sensitivity of their funds in accordance with the market. Mutual Funds in Bangladesh started
its journey with the hope of realizing extra return for the investors by pooling the savings and
applying institutional investors’ skill. Though, the industry is dominated by the state owned
funds private sectors are also coming to stage and making the industry more competitive. For
Bangladesh, more institutional investors are necessary to make the capital market stronger with
the capacity of fund accumulation and managerial skills to improve the diversification, stock
selection and market timing ability thereby the performance of the funds. Moreover, the fund
mangers’ performance needs to be well supported by the sound regulatory framework and
increased supply of shares in the capital market. In this study, lacking of large number of sample
size and the shorten study periods are the two main limitations which suggest further studies to
judge the performance of Mutual Funds in Bangladesh in later period.

There would be certain shortcoming of investing in almost all investment-prospects. However, in

case of mutual funds, the risk of disadvantages can be mitigated (reduced) by preparing a list of
its limitations. Once such a list is prepared, then each item (disadvantage) in the list shall be
scrutinized and determined to decide whether it applies as a disadvantage of mutual fund or to a
particular scheme of it.

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Recommendation:
The main reason of the MF market lagging behind is that most of the funds are close-ended. That
means the MF shares mature in a specific period of time. Buying and selling of open-ended MFs
are different from those of close-ended MFs. The number of open-ended MFs in the market is
very small. There should be more open-ended MFs alongside the close-ended ones. More MFs in
the market can reduce the capital market's too much dependence on the banking sector.

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References:

 http://www.dsebd.org/

 Cuthbertson, Keith, Nitzsche, Dirk and O'Sullivan, Niall, Mutual Fund Performance:
Skill or Luck? (July 14, 2005).

 A.B.M. Munibur Rahman, Prof. Fang Qiang Suborna Barua ( 2012)

 Mohammad Nayeem Abdullah, Kamruddin Parvez, School of Business, Independent

University Bangladesh (IUB) Chittagong. “Corporate Governance of Mutual Fund In
Bangladesh”

 http://www.iiste.org

 http://www.iiste.org/Journals/

 https://www.google.com.bd/url?sa=t&rct=j&q=&esrc=s&source=web&cd=9&ved=0CF8
QFjA&url=http%3A%2F%2Fresearch.daffodilvarsity.edu.bd%2Fwpcontent%2Fuploads
%2F2014%2F04%2FOurArticleFinal.doc&ei=VRrqU6q1HoS48gWJooCQDA&usg=AF
QjCNEgxD4ByvnbSU_iOwk1GnbTsepw&sig2=yo2vqNz_MiIQX60T6kqt9Q&bvm=bv.
72938740,bs.1,d.cGU&cad=ra

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