T-bonds: A safe haven for IDLC Investments to ensure security of clients

Infographic: TBS

IDLC Investments Limited, the investment banking arm of IDLC Finance, with a primary commitment to maximising the safeguarding of its clients' funds, plays a significant role in the strategic investment in government securities, commonly referred to as treasury bonds or T-bonds.

The merchant bank has an extensive experience in overseeing clients' funds through its diversified Discretionary Portfolio Management (DPM) services.

At present, the company manages a total of Tk262 crore of clients' funds, of which, it invested Tk126 crore or 48% in T-bonds as fixed income tools to reduce risk and guarantee a sure-shot return in portfolio.

Abul Ahsan Ahmed, head of portfolio management at IDLC Investments, told The Business Standard, "We started a pilot project of investing in T-bonds back in 2020, and we were the first to do so."

"We have developed the supporting tools required for investing in bonds with the help of our parent company. And since 2022, we have been providing this service full-fledgedly."

"Any investor can invest in short-term treasury bills and long-term bonds through us," he added.

Besides, the client can sell the bond anytime through stock exchanges.

"We even have services for investors who want to invest only in treasury bonds. What's more, we encourage customers to invest a portion of their funds in bonds because they offer good and guaranteed returns. Also, there is no investment ceiling like a savings certificate, investors get a tax rebate, and there's no capital gain tax in bond investments," Abul Ahsan added.

The DPM services

IDLC Investments has been providing DPM services since 2007. From then till 2022, the average yearly return on DPM was 12.2%, where its own portfolio's average return on index was 8.9%.

The company currently has four DPM schemes, which aim to broaden access to investments, catering to individuals capable of saving a minimum of Tk5 lakh.

Under the 'MAXCAP' scheme, investors can deposit at least Tk5 lakh for a tenure of five years. IDLC Investments will skillfully invest the money into growth stocks to maximise long-term return. It will charge 2.5% of the fund under management as annual fees, but it is negotiable in terms of the fund size.

The Capital Protected Scheme is a product for risk-averse investors that guarantees at least the return of the deposited capital even if the investment manager incurs losses.

An investor will have to deposit at least Tk10 lakh for five years and all the positive return will be given to the investor after the tenure. IDLC Investments will charge 1.5% on the market value of securities as annual management fees.

The Profit-loss Sharing Scheme enables the sharing of profits or losses between the client and IDLC Investments at a ratio of 70:30. IDLC Investments will invest 30% and the client will invest 70% of the size of an investment account.

An investor can deposit at least Tk10 lakh for five years under the scheme. The investment manager will charge 2.5% annual management fees.

Finally, the Portfolio Advisory Service is the specialised investment advisory product of IDLC Investments. It is a value-added service offered to the clients who seek high-quality portfolio management advisory and research support.

An investor can deposit at least Tk10 lakh for five years under the scheme. The management fees will be fixed based on the agreement with the clients.

Abul Ahsan Ahmed said the investment objective to provide investors with substantial returns to offset inflation will be achieved through a methodical investment approach tailored in line with the broader risk appetite and return expectation of client groups.

To build a robust operation, the discretionary funds will be managed through the direct supervision of the company's Investment Management Committee, he added.