Mutual fund is an investment fund that has independent legal entity. The fund collects money from investors and use that money to invest in a portfolio consists of IPOs, stocks, bonds, money market instruments and other kinds of permissible investments. When the fund generates profit, the return is distributed to the investors in the form of dividend and capital gain/loss.
The fund is initially formed by the Sponsor, Trustee and Custodian, and it is managed by the asset management company. Although the fund has independent legal entity, the operation, management and stakeholders involved in the fund is highly regulated by Bangladesh Securities and Exchange Commission.