A new Sri Lankan investment fund that opened for subscription Friday is targeting the banking sector which is seen doing well given the need for funding to fuel an economic boom, officials said.
Deutsche Bank
and Ceylon Asset Management (CAM) Company have set up the Ceylon Financial Sector Fund to invest in banking, finance and insurance companies which have outperformed the share market this year.The sector is forecast to grow strongly given accelerating economic growth after the end of the island's 30-year ethnic war in May 2009, officials said.
Fund units are offered at 10 rupees each with a minimum
investment of 10,000 rupees."The banking sector has outperformed the All Share Price Index," Dulindra Fernando, managing director of CAM told a news conference.
"We've created this fund that enables investors to capture part of this booming industry. It is an open-ended fund, fully tax exempt and money can be withdrawn anytime."
CAM Company is a joint venture between Sri Lanka Insurance Corporation which has a 25 percent stake and Ceylon Capital Trust which has 75 percent.
The fund will minimise risk by eliminating speculative trading and daily valuations and the fund's portfolio content will be disclosed on the company website daily.
The 10 companies the fund will initially invest in are Commercial Bank, Hatton National Bank, Lanka Orix Leasing Company, DFCC Bank, Sampath Bank, National Development Bank, Nations Trust Bank, Central Finance, Seylan Bank and Aviva NDB Insurance.
The fund's maximum exposure limit to one company is 15 percent.
"The sector is in very good shape particularly with non-performing loans in the range of five percent with the exception of Seylan Bank," Fernando said.
"In current economic scenario we see banking sector growth being driven by low interest rates,, excess liquidity in the financial sector and hopefully a VAT (value added tax) reduction for the financial sector in the next budget," he said.
"We expect many new projects to need financing in the fast growing sectors of the economy."
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