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“Sri Lanka Mutual Fund Sector Opportunity Outlook 2022” report gives comprehensive insight on the mutual fund (unit trust) sector in Sri Lanka. Report highlights the ongoing trends in the development of mutual fund segment and its future growth opportunity. During last six years (2011-2016) the mutual fund sector returns grew by more than 11%. The highest growth was witnessed in 2015, when the sector returns grew by almost 17%. Currently Open Ended Money Market funds dominate the mutual fund sector landscape with total share of close to 63% and assets vale of US$ 433 Million.
The mutual fund industry of Sri Lanka has excellent potential to develop and become a strong component of capital market with required changes in the market structure, distribution channels, products and investment education. While a higher growth trajectory for the economy generated greater opportunities for the fund, significant short term concerns remain over the fundamental state of the economy. As interest rates remains the most important driver of fund returns, future returns are a function of interest rate movements that are currently changeable.
The government has actively participated in the growth of the mutual fund sector through the regulatory and policy framework. Certain initiatives have been taken in the banking sector in order to enhance the rising market figures. Government initiatives for foreign trade have made ways for foreign investors to invest in the country’s rising markets. State department’s office of investment affairs has opened a lot of opportunities for investments and portfolios. The securities and exchange commission of Sri Lanka covers Colombo Stock exchange, Unit Trusts, stock brokers, listed public companies, margin traders, underwriters, investment managers, credit rating agencies and securities depositories.
Portfolio investments are encouraged in the country by certain government initiatives. Foreign trade regulations have been relaxed by the government in recent years. Foreign investors can purchase up to 100% of equity in Sri Lankan companies in numerous permitted sectors. In order to facilitate portfolio investment, country and regional funds may obtain SEC approval to invest in Sri Lanka’s stock market. These funds make transactions through share investments in external rupee accounts maintained in commercial banks.
The market has grown up till now and with improvements made clubbed with ones in the pipeline have assured the market growth in future. The principle institutions are functioning to cure the most practical mechanism existing in stock brokering firms and their branches. In this context, both SEC and CSE, the stock brokerage industry and the unit trust industry have decided to work together to expand the scope of the stock brokering industry to include other capital market products and strengthen their institutional capacity and professional skills to handle a wider range of products that include unit trusts.
the economy of Sri Lanka consist of a large capacity and a multitude of opportunities to be exploited in the banking financing sector with a need, desire and ability to overcome expected challenges in the future. The measures to be taken in the particular situation and time are the achievement resulting into financial stability. Many steps have been taken in the previous years and are still in the pipeline to be implemented in the coming years for better growth of the industry. The country has proved itself as a powerful nation that has the ability to control its destiny in the last decade during financial crisis and will continue to do so in the future.
“Sri Lanka Mutual Fund Sector Opportunity Outlook 2022” report highlights:
Sri Lanka Financial Sector Overview
Sri Lanka Unit Trust/Mutual Fund Market Overview
Types of Unit Trusts/ Mutual Funds
Funds and Fund Managers
Rules for Unit Trust/ Mutual Fund Companies