On March 3, 2026, the DSEX lost 209 points in a single session — its worst day in six years. Of the 391 stocks that traded, 349 fell. But buried inside that carnage was a divergence that most investors missed entirely: some mutual funds barely flinched, while others lost value twice over. The difference was not luck. It was structure.
The March crash, triggered by the Strait of Hormuz disruption and Iran’s retaliatory missile strikes that threatened 90% of Bangladesh’s energy imports, punished equity-heavy portfolios indiscriminately. DSEX fell from 5,534 to 5,325 in hours. But what happened inside Bangladesh’s 98 open-end and 37 closed-end mutual funds tells a more nuanced story — one that separates the funds worth holding through volatility from the ones that amplify it.
The Numbers Through the Storm
As of March 25, 2026, the average open-end mutual fund returned 5.90% year-to-date against the DSEX’s 9.30%. Funds underperformed the broad market by 3.40 percentage points. That headline figure, however, disguises a massive spread within the fund universe.
At the top: IDLC Growth Fund delivered 11.30% YTD, beating the index. Ekush Growth Fund returned 9.00%. 3i AMCL 1st Mutual Fund posted 10.40% — a remarkable turnaround from its -9.30% the previous year. These growth-oriented funds absorbed the March crash and still came out ahead, driven by bargain hunting in quality equities after the bottom.
At the bottom: Joytun 1st Unit Fund and PLI AML 1st Unit Fund returned exactly 0.00% YTD. AMS Global First Regular Income Fund managed 0.10%. These funds did not crash — they simply did nothing, which in a market that rose 9.30% is its own kind of failure.
The gap between the best and worst open-end fund is 11.30 percentage points. That is not a rounding error. That is the difference between a fund manager who positioned for recovery and one who sat in cash while the market moved without them.
Fixed-Income Funds: The Quiet Winners
While equity funds whipsawed through March, fixed-income and balanced funds did something that equity investors rarely witness — they held steady. VIPB Fixed Income Fund posted 7.80% YTD with only a -0.30% weekly decline during the worst of the selling. UCB Income Plus Fund, the largest fixed-income fund at BDT 2,945 million in assets, returned 5.20% YTD with a positive 0.30% weekly change even as equities cratered.
Shanta Fixed Income Fund, managing BDT 1,387 million, gained 5.00% YTD. Sandhani AML SLIC Fixed Income Fund returned 3.50% on BDT 1,110 million. These are not spectacular returns. But during the week that DSEX plunged 209 points and margin calls cascaded across leveraged portfolios, these funds posted flat-to-positive weekly NAV changes.
The lesson is not that fixed-income funds are better. It is that debt allocation is insurance — and insurance only proves its value during the event it was purchased for.
The Closed-End Trap: Losing Twice
Here is where the structural story turns painful. Bangladesh’s 37 DSE-listed closed-end funds faced a problem that open-end fund investors never encounter: they got hit twice.
When panic selling struck on March 3, closed-end fund investors could not redeem at NAV. They had to sell on the exchange — into a market where 349 stocks were already falling. The result was a double loss: the underlying portfolio declined, and the discount to NAV widened simultaneously. An investor holding a closed-end fund already trading at a 30% discount to NAV watched that discount stretch further as panic sellers dumped units at whatever price the market would take.
This is textbook liquidity risk, and the numbers make it visceral. As of October 2024, only 3 of 37 closed-end funds traded above their Tk 10 face value. The March crash made that picture worse.
And then came the regulatory overhang. In November 2025, BSEC published draft regulations phasing out closed-end funds entirely — calling them “outdated” and “inconsistent with international standards.” Existing funds must convert to open-end upon tenure expiry. No new closed-end funds will be approved.
For investors still holding closed-end fund units, this creates a structural ceiling on recovery. Even if the underlying portfolio appreciates, the market knows these instruments are being discontinued. That awareness suppresses demand and maintains the discount.
What This Means for Fund Selection
The March 2026 crash did not create new truths about mutual funds. It revealed existing ones under pressure.
Growth funds with active managers — IDLC Growth, Ekush Growth, 3i AMCL — proved they can recover from drawdowns and outperform. Fixed-income funds proved they can protect capital when geopolitical shocks hit. Passive or poorly managed funds proved they can return zero in a market that gained 9.30%. And closed-end funds proved that structural liquidity risk is not theoretical — it is the difference between redeeming at NAV and selling at a 40% discount during a panic.
With DSEX consolidating at 5,257 as of April 17 — still 5% below the pre-crash level of 5,534 — fund selection has never mattered more. The market is not rewarding passive exposure. It is rewarding managers who positioned defensively before March and offensively after it.
Choose accordingly.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Mutual fund investments are subject to market risk. Past performance does not guarantee future results. Consult a qualified financial advisor before making investment decisions.