ICB Asset funds sink into losses, fail to pay dividend

ICB Asset Management Company, a subsidiary of the Investment Corporation of Bangladesh (ICB), witnessed a significant erosion in the portfolios of its operated mutual funds due to the volatile and declining capital market in the 2024-25 fiscal year.

As a result of the portfolio erosion and incurred losses, the eight closed-end funds managed by the asset management company have failed to declare any dividends for their unitholders for FY25. 

The funds also did not pay any dividends to their unitholders in the previous fiscal year, according to data from the asset manager.
Of the 10 closed-end mutual funds, ICB Asset Management approved the financials for eight that follow the fiscal year cycle. 

Among them, seven incurred losses in FY25, while only one fund managed to post a profit, which incurred a loss in the previous fiscal year.

Of the seven mutual funds, ICB data showed losses in FY25 significantly declined over the previous year.

Due to the incurred losses and zero dividend declarations, all eight mutual funds saw their unit prices decline yesterday, ranging from a maximum of 7.84% to a minimum of 1.96%, according to DSE data.

Mahmuda Akhter, chief executive officer of ICB Asset Management, told TBS, “Due to the declining capital market, the mutual fund portfolios have eroded. And provisioning against this erosion has led to losses.”

She added, “In the interest of unitholders, we proposed to the Bangladesh Securities and Exchange Commission (BSEC) to allow reduced provisioning against the portfolio erosion, but we have not received any response yet. As a result, we had to make full provisioning in line with the existing rules.”

She further said, “The index at the beginning of the fiscal year dropped significantly, which caused the portfolio erosion.

“However, since the end of the fiscal year, the market has shown some upward trend, resulting in a 20-25% increase in portfolio value. If this trend continues, the funds are likely to generate good profits in the next fiscal year, and we will be able to declare dividends.”

According to the data of the Dhaka Stock Exchange (DSE), at the beginning of FY25, DSEX, the benchmark index of the premier bourse, stood at 5,340 points, which declined to 4,836 points at the end of the fiscal year. 

After ending the last fiscal year, since July this year, the stock market has begun to turn around, riding on bank stocks and also fundamentally stocks.

Recent data shows DSEX recovered around 572 points in over one month as of yesterday, reaching 5,408 points. 

ICB Asset Management is currently operating 15 mutual funds – 10 closed-end and 5 open-end. 

The asset manager has published the financials of eight funds that maintain a July-June fiscal year. 

The total fund size of the eight funds is Tk685 crore.

Financial status of funds 

During FY25, seven of the eight ICB-managed mutual funds that published their financial statements experienced losses. However, these losses were significantly less than in the previous year.

ICB AMCL Second MF, with a fund size of Tk50 crore, reported a loss of Tk0.15 per unit, a marked improvement from its Tk1.86 per unit loss in FY24. Similarly, the ICB Employees Provident MF One, which has a fund size of Tk75 crore, saw its loss per unit drop to Tk0.23, down from Tk1.78.

The Prime Bank 1ST ICB AMCL mutual fund reported a loss of Tk0.28 per unit, the Phoenix Finance 1st MF a loss of Tk0.17, and the ICB AMCL Third NRB MF a loss of Tk0.02. The IFIL ISLAMIC MF-1 incurred a loss of Tk0.32 per unit, while the ICB AMCL Sonali Bank 1st MF had a loss of Tk0.04 per unit. 

In a notable exception, the ICB AMCL First Agrani Bank MF, with a fund size of Tk100 crore, turned its previous year’s loss of Tk1.69 per unit into a profit of Tk0.36 per unit for FY25.