First Janata Bank Mutual Fund holds underlying assets worth Tk 7.00 per unit. On the Dhaka Stock Exchange, those units change hands at Tk 2.90. A buyer pays 41 taka and receives 100 taka of net asset value. That is not a typo. It is a 58.6% discount, and it has persisted for years.
Janata is not the outlier. Of 36 closed-end mutual funds listed on the DSE, 32 trade below their NAV. The average discount is 35.9%. Green Delta Mutual Fund trades at 62.5% off. Mercantile Bank 1st Mutual Fund: also 62.5%. AB Bank 1st: 61.7%. AIBL 1st Islamic: 61.3%. LankaBangla Global Fund 1 sits at the bottom of the table at a 64.4% discount to NAV — the most pronounced gap in the entire sector.
If a Tk 100 portfolio sold for Tk 35 in Dhanmondi or Gulshan, every analyst in this country would call it the trade of the decade. Why does the DSE do exactly that, every trading day, and almost no one buys?
The Scale of What We’re Talking About
Globally, closed-end fund discounts exist — but they typically range between 2% and 10%. A University of Dhaka research paper published on arXiv in 2022 documented that Bangladesh’s discounts are among the highest in the world, frequently exceeding 40-60%. The DSE mutual fund sector’s P/E ratio sat at 4.16 in January 2025 — a number that would be considered distressed in any developed market and reflects the same underlying distrust that produces the discount.
This is not a market that has temporarily mispriced one fund. It is a market that has structurally rejected an entire asset class.
The reasons are eight, and they compound.
Why the Discount Exists
No redemption mechanism. Open-end funds let you sell units back to the manager at NAV. Closed-end funds do not. Your only exit is the secondary market — where price is set by who wants to buy, not what the assets are worth.
Thin liquidity. Most DSE closed-end funds trade fewer than a million units a day. An investor trying to exit a meaningful position moves the price against themselves. Buyers know this and demand a discount upfront to compensate for the illiquidity they will inherit.
Investor distrust. Bangladesh’s retail investor base remembers the mismanagement, poor returns, and opaque dealings that scarred the sector for years. As of October 2024, only 3 of 37 listed closed-end funds traded above their Tk 10 face value. The market is voting with its wallet.
Limited institutional participation. In developed markets, arbitrageurs and institutional investors close NAV gaps by buying discounted funds and shorting the underlying basket. Bangladesh’s institutional layer in this segment is too thin to perform that function. The discount has no natural enemy.
Tenure extension fatigue. Closed-end funds were sold with defined maturity dates that promised eventual liquidation at NAV. Many managers extended tenures repeatedly. Each extension postponed the day the discount would close — and each extension taught the market that the discount might never close at all.
Management fees that erode NAV. Annual fees of 1.5-2.5% reduce NAV every year regardless of performance. In a low-return environment, that is structural drag the market price has every reason to discount further.
Opaque portfolio disclosure. NAV is published. The underlying holdings — at the granularity needed to verify the NAV calculation independently — often are not. Information asymmetry always discounts the price.
Tax inefficiency. The fund pays tax on its income. The investor pays tax on the distribution. Holding the underlying securities directly avoids one of those layers. The wrapper itself destroys value.
Eight reasons. None of them require any single fund manager to be doing anything wrong. The discount is the math of the structure.
What BSEC Is Now Forcing
In November 2025, BSEC issued the Mutual Fund Regulations 2025, calling closed-end funds “outdated, inconsistent with international standards, and lacking flexibility.” The regulator effectively banned the issuance of new closed-end funds and put the existing 31-34 listed funds on notice.
The headline rule: any fund trading at more than a 25% discount to NAV faces mandatory liquidation or conversion to open-end structure. Funds that fail to pay dividends for three consecutive years face liquidation. A BSEC task force in February 2025 had already recommended no further tenure extensions. By July 2025, two funds were scheduled for conversion as test cases, with tenure expiring December 2025.
This is the closing of the loop the market had stopped believing would close. If the regulations are enforced as written — and the early conversions suggest they will be — every fund currently trading at a 30-60% discount has a regulatory deadline by which the discount must, mechanically, narrow.
For unit-holders who bought the discount and waited, the wait may finally have a definite end. For the sector itself, the end has already been written. The only question now is how orderly the closing chapter is — and whether the broader DSE absorbs the unwind without disturbance.