The NAMAL Acuity Value Fund (NAVF), the first unit trust to be listed in the Colombo Stock Exchange (CSE) has had ‘excellent’ response from pension funds, according to officials. "Pension funds see this as a good investment as they can go for a much higher rate of return with this instead of investing in 10% to 12% interest in fixed income securities because the CSE is predicted to perform well in the future. So, many investors feel it is better to invest in the CSE through such investments,” Ray Abeywardene, CEO Acuity Partners told the Sunday Times FT on the sidelines of a media conference when Acuity launched the NAVF initial public offering (IPO) with National Asset Management Limited (NAMAL) on Wednesday.
He said the issue size is Rs 1 billion in this closed-end fund and they have already got unofficial confirmation from interested parties for Rs 200 million. “This is in addition to the DFCC and HNB’s commitment of Rs. 100 million each,” he said. He said the Rs. 1 billion, 10 year Fund will give the public the option of investing in listed equities and listed and unlisted fixed income securities. He said the 20 million units are on offer at Rs. 50 per unit, and the minimum investment is Rs. 10,000 while the Fund will be liquidated in 10 years and during this period the units will be tradable on the CSE.
Adopting a dynamic asset allocation strategy, the fund assets will be invested in both equities and fixed income securities depending on the prevailing investment climate. This strategy is expected to limit any downside risk while capitalizing on upward movements in the stock market. Commenting on the IPO, S. Jeyavarman, CEO NAMAL said this move to have such a fund listed on the CSE comes at a time when the country is looking towards a new era.
“The interest rates are declining at a rate and it is a wise decision to have the investments in equity,” he said. Mr. Abeywardena said the unit holder can sell units at the prevailing market price on the CSE during the 10-year period until liquidation. “The closed- end fund can be configured into a stock that is listed on an exchange and traded in the secondary market and like all shares, units of a closed-end fund are bought and sold on the open market, so investor activity has no impact on underlying assets in the fund's portfolio. The ability to shift funds between the equities market and debt securities markets enables the Fund Manager to seek to preserve capital while giving the flexibility to capture the best returns available during the investment cycle,” he said. |
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