All 10 RACE Asset Management mutual funds trading below half the face value

The units of all 10 mutual funds managed by RACE Asset Management are being traded below half the rates following continuous drop in prices.

All the 37 mutual funds listed on the Dhaka Stock Exchange had started trading with a face value of Tk 10 per unit.

Much to the frustration of the investors, the prices of only the 10 handled by RACE have dropped below Tk 5 per unit; worse, even at Tk 4 in some cases.

The other 27 mutual funds are being traded over Tk 5 a unit.

Speaking to bdnews24.com, Dhaka University’s accounting department Professor Mizanur Rahman blamed “mismanagement of the asset management firms for the bad condition of the mutual funds in Bangladesh”.

“They are investing haphazardly without thinking about the investors,” he remarked.

Prof Mizanur also pointed the finger at the Bangladesh Securities and Exchange Commission. “And steps have not been taken (by the regulators) against those who made such investments,” he said.  

According to the DSE website, a unit of EBL First Mutual Fund under RACE management was traded at Tk 4.9 on Tuesday against Net Asset Value or NAV of Tk 10.25.

The units of the nine other mutual funds managed by RACE were similarly languishing:

Trust Bank First Mutual Fund - NAV Tk 10.39; traded at Tk 4 on Tuesday.

IFIC Bank First Mutual Fund – NAV Tk 10.3; last traded at Tk 3.9.

First Janata Bank Mutual Fund - NAV Tk 10.32; last traded at Tk 4.

Popular Life First Mutual Fund - NAV Tk 10.36; traded at Tk 3.9 on Tuesday.

PHP First Mutual Fund – NAV Tk 10.29; last traded at Tk 3.9.

EBL NRB Mutual Fund – NAV Tk 10.28; last traded at Tk 4.6.

AB Bank First Mutual Fund – NAV Tk 10.53; last traded at Tk 3.9.

First Bangladesh Fixed Income Fund – NAV Tk 10.4; last traded at Tk 3.9.

Exim Bank First Mutual Fund - NAV Tk 10.31; last traded at Tk 4.3.

“Investors have lost faith in mutual funds due to mismanagement. No-one wants to buy mutual funds now,” Mizanur Rashid Chowdhury, president of small investors’ organisation Share Market Investors’ Unity Council, told bdnews24.com.

Asset & Investment Management Services of Bangladesh Limited or AIMS Bangladesh Managing Director and CEO Yawer Sayeed said prices of mutual funds have dropped due to a fall in demand and the “poor state of the share market”.

“All the mutual funds have completed announcing dividends. No-one will by mutual funds now. So the demand is less,” he said.

“The share market’s condition is bad as well. Share prices are dropping every day. In this circumstance, per unit Net Asset Value of the mutual funds is dropping. So the prices are falling,” Sayeed said.  

The AIMS boss also said a mutual fund’s price per unit can drop below NAV in two ways.

“A mutual fund’s price can drop illogically. Maybe (because) the mutual fund did not behave well with the investors by not returning good profits. Perhaps, the mutual fund’s asset management was not good,” he said.

RACE started its journey on Sept 24, 2008.

Its Chairman Chowdhury Nafeez Sarafat is also Chairman of the Padma Bank, formerly Farmers Bank.

RACE has investment from the Farmers Bank.

Sarafat became chairman of the bank after it had gone broke following a loan scam. Later, it was renamed to Padma Bank.

Contacted for comments on the drop in prices of units managed by his asset management firm, Sarafat said he does not look after this issue and referred bdnews24.com to the managing director of RACE instead.