July 30, Colombo: Securities & Exchange Commission (SEC) of Sri Lanka today licensed the country's first ever dollar denominated unit trust today (30 July) with the approval of the Central Bank of Sri Lanka and the Ministry of Finance.
The new open-ended Fund that offers US Dollar returns, invests exclusively in dollar denominated Sri Lankan sovereign bonds, bank and corporate issued dollar bonds.
The Fund is managed by Ceylon Asset Management (CAM), with Deutsche Bank AG as the trustee and custodian.
The fund risk is currently limited to sovereign risk and bank guaranteed risk whilst avoiding exposure to Sri Lankan rupee currency risk.
The fund is dollar denominated while capital and income can be repatriated freely in foreign currency to the investors' bank account by the Trustee and Custodian Bank.
The minimum investment for the fund is US$ 1,000.
The global ratings agency, Fitch Ratings yesterday assigned the new Ceylon Dollar Bond Fund a 'BB-' Fund Credit Rating and 'V-5' Fund Volatility Rating.
Fitch considers CAM, which has over 14 years of experience in fund management, suitably qualified, competent and capable of managing the fund.
The fund expects to attract Sri Lankan expatriates and other US Dollar investors. Foreign investors and BOI companies can now invest in high yielding Sri Lankan dollar bonds via the fund.
"Dollar bond funds will assist enhance current investor base of the local unit trust industry and also enable benefits of dollar investment scale which was previously limited to SLR (Sri Lankan Rupees)," said Rohan Senewiratne, Consultant, Capital Market Development at SEC.
Dulindra Fernando, Managing Director of Ceylon Asset Management said the management hopes to attract foreign investors with a target return of over 4 percent a year.