Written by The Banking Post
Mutual fund investors are bracing for another disappointing year as most closed-end funds once again failed to declare dividends for the financial year ended June 2025, amid prolonged market slump and higher provisioning against unrealised losses.
Out of 37 mutual funds listed on the Dhaka Stock Exchange (DSE), only 18 have so far disclosed financial results for FY25. Of them, 16 declared zero dividends due to losses, while only two — Capitec Grameen Bank Growth Fund and Grameen One: Scheme Two — announced cash dividends of 3.30 per cent and 7.5 per cent, respectively.
Fund managers blamed continued price erosion of fundamentally strong stocks and regulatory requirements to keep 100 per cent provisions against unrealised losses for the sector’s lacklustre performance.
The DSEX, the benchmark index of the DSE, lost 9.40 per cent or 502 points to close at 4,838 points in FY25, compounding the strain on portfolios. “Mutual funds’ returns are closely tied to market performance since their earnings come largely from capital gains in stock trading. But the secondary market offered little scope for gains throughout FY25,” said Akramul Alam, head of research at Royal Capital.
Adding to the pressure, the IPO market remained dry for a second year, depriving funds of one of their few secure profit streams.
Analysts noted that most mutual funds hold blue-chip stocks such as Renata, BAT Bangladesh, and Beximco Pharma, but even these companies saw price erosion of 12.5–36 per cent during FY25, dragging net asset values (NAV) of many funds below their face value.
Funds managed by the state-run ICB Asset Management Company mirrored the trend. None of its eight closed-end funds declared dividends for FY25 — repeating FY24’s outcome — although losses narrowed sharply due to earlier provisioning. For instance, ICB AMCL 1st Agrani Bank MF posted a profit of Tk 35 million in FY25, rebounding from a loss of Tk 166 million in FY24, while ICB AMCL Second Mutual Fund cut its loss to Tk 7.5 million from Tk 93 million.
Despite signs of reduced losses, investors’ frustration remains high. “Zero dividends for two consecutive years will deepen the crisis of confidence in mutual funds,” warned Mahmuda Akhter, CEO of ICB Asset Management, noting that unit holders have already lost faith in the sector.
Currently, only three mutual funds — Prime Finance First Mutual Fund, Grameen One: Scheme Two, and Reliance One (the first scheme of Reliance Insurance Mutual Fund) — are trading above face value, underscoring the depth of the sector’s malaise.
