Exchange-traded funds will hit DSE in three months
Bangladesh is expected to get its first exchange-traded funds (ETFs) in three months, which would give investors a new product and help stabilize the stock market.
An ETF is a type of investment pooled by investors that works much like a mutual fund.
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The difference is that it is used to invest in certain stocks that are included in an index, or certain sectors or other assets.
Mutual funds, on the other hand, can be used to invest in stocks and fixed income assets.
ETFs can be bought or sold on a stock exchange in the same way as a common stock.
Asset managers manage the funds and pay dividends to investors while trustees ensure that all rules and regulations are followed and the interests of unitholders are protected.
Yesterday, the Dhaka Stock Exchange (DSE) announced that it would allow asset managers to launch ETFs, which would invest in certain indices, mainly the DS-30, the blue chip index.
Recently, LankaBangla Asset Management Company, Shanta Asset Management and Green Delta Dragon Asset Management submitted proposals and applications expressing interest in sponsoring an ETF.
Based on their proposals, the DSE held consultations with the Bangladesh Securities and Exchange Commission (BSEC) and the regulator gave its approval in principle to introduce ETFs to the capital market.
“The DSE is working so that at least one or two ETFs can be introduced within three months,” Tarique Amin Bhuiyan, chief executive of the DSE, told a press briefing at the auditorium of the country’s premier stock exchange. .
“The DSE wants to prepare the market now. We will educate people so that they realize what the product is and thus invest.”
Whenever stock exchange officials talk to foreign investors and ask them to invest in the Bangladesh stock market, foreigners ask if there is an ETF or other products apart from stocks, he said. -he declares.
“ETF is one of the best products to stabilize the market, so we focused on it,” Bhuiyan said.
The size of an ETF would be at least Tk 50 crore, of which 10% would be funded by sponsors and 2% by the asset management company. The rest can be lifted from the public.
With investing in an ETF, investors will basically be investing in an index and it is more transparent than mutual funds as the asset manager cannot buy stocks or any product other than the fixed index.
If necessary, the DSE will launch ETFs in the pharmaceutical sector or other sectors, Bhuiyan said.
Chief Operating Officer of DSE, Mr. Shaifur Rahman Mazumdar, said that the first exchange has taken the initiative to establish an Alternative Trading Board (ATB) where open-ended mutual funds, debt securities and equities unlisted would be traded.
“Now we have all the technologies to trade the products except mutual funds, so we are bringing the technologies,” he said, adding that the DSE has already signed a memorandum of understanding to this regard with the Bombay Stock Exchange.
The ATB will be ready to ship all products next September, he said.
Md Ziaul Karim, Technical Director of DSE, was also present at the event.