In a giant step to internationalize the investment industry in Sri Lanka, which has thus far been restricted to rupee investments, the Securities & Exchange Commission (SEC) licensed the country’s first ever dollar denominated unit trust with the approval of Central Bank and Ministry of Finance. Foreign investors and BOI companies can now invest in high yielding Sri Lankan dollar bonds, via the ‘Ceylon Dollar Bond Fund’ innovated by Ceylon Asset Management (CAM), structured exclusively in US dollar units to avoid exposure to currency risk.
The new Ceylon Dollar Bond Fund, launched on 30th July, invests exclusively in dollar denominated Sri Lankan sovereign bonds, bank and corporate issued dollar bonds. Managed by Ceylon Asset Management (CAM), with Deutsche Bank AG as the trustee and custodian, the fund will be rated by Fitch Ratings, where the risk exposure is limited to sovereign and bank risk.
Ceylon Dollar Bond Fund is for US Dollar investors who wish to achieve capital appreciation and income growth over a period of time and targets foreign institutions along with BOI approved companies in Sri Lanka and foreign retail investors. The open-ended fund allows for withdrawal at anytime and to invest without the requirement of a SIA account. The minimum investment for the fund is USD 1,000 to attract Sri Lankan Diaspora investors.
Rohan Senewiratne, Consultant, Capital Market Development at SEC said, “The first ever dollar denominated investment product is a result of 10 key projects unveiled in 2012 under Capital Market Development Roadmap of SEC. 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.”
Dulindra Fernando, Managing Director of Ceylon Asset Management who has over 14 years of experience in fund management said, “It was an honour and privilege for Ceylon Asset Management to be awarded the licence. This is a milestone for the industry as well as for us, to launch Sri Lanka’s first ever US Dollar denominated unit trust. We hope to attract foreign investors with target dollar returns in excess of 4% p.a.,” he emphasised.
Fernando went on to note that such a fund facilitates a capital market platform for Sri Lankan fund managers to promote dollar denominated investment products that are invested outside the country on regional stock exchanges. “Singapore and Dubai have developed their financial sectors by facilitating dollar investment structures to successfully attract large regional investments beyond the limited size of their own domestic economy. For example, Singapore has over USD 1.3 trillion assets under management,” he explained.
Ceylon Asset Management currently manages the Ceylon Income Fund which is rated ‘A-‘, the Ceylon Gilt Edged Fund rated ‘AAA’ by Fitch Ratings, and three equity index funds, Ceylon Index Fund, Ceylon Tourism Fund and Ceylon Financial Sector Fund.(KH/SI)
