KARACHI – Al Meezan Mutual Fund Limited (AMMF), one of the country’s leading Islamic investment companies, is going to convert into an open ended scheme, it has been learnt. Furthermore, after conversion, the Islamic investment company has also decided to charge the unit holders with a ‘back end load’ ranging from five to 10 percent depending on the period of redemption.
The decision was taken by the board of directors of AMMF, a public limited company carrying on the business of a close ended mutual fund since 1995, in its meeting. “The board of directors of AMMF… has approved the conversion of AMMF an investment company into an open end scheme,” the company, as required by Clause (xxiii), Listing Regulation No 35 under Code of Corporate Governance, informed its shareholders at Karachi Stocks Exchange.
It has been decided that after conversion into an open ended scheme, the Mutual Fund would be charging “back end load” redemption of units of AMMF issued to unit holders. “The back end load would become part of the fund property and shall be charged to all the unit holders against units issued in lieu of existing shares of AMMF without any discrimination,” a company notice Al Meezan/AMMF/ 0060/201 issued indicated on Thursday.
It was decided that within six months of its conversion into an open end scheme, the company’s back end load for redemption of units of AMMF issued in lieu of existing shares of AMMF would be 10 percent of the net asset value per unit. After six months, but within one year of its conversion the applicable back end load charges would be five percent while after one year of its becoming an open ended scheme the AMMF would charge no load.
The above board decisions, however, are subject to all regulatory approvals and compliance with the relevant statutory requirements, the fund clarified. The open ended mutual funds are those in which investors could buy units from the fund house at any given time. There is no lock in period and they can redeem their units anytime as well. While the closed ended mutual funds could be bought in the initial offer period or through the stock exchange only when another investor wants to sell these units.
The fund house is not allowed to issue more units. There is a lock in period as well specified by the fund, if you decide to sell within that period there are exit charges levied. The mutual funds are usually converted into open ended schemes after the completion of the lock in period. Incorporated in July 1995 as a public limited company, the AMMF is registered under the Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003.
The company was listed on the Karachi Stock Exchange in September 1996 as a close ended mutual fund. The company maintains at least 60 to 80 percent of its net assets in equities. The rest of the 20 to 40 percent, depending upon market conditions and interest rate scenario in the economy, are utilised for investment in equities or debt and money markets.
