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Merchant Bank of Sri Lanka (MBSL) plans to launch equity fund management based on the MBSL Midcap index with a brisk kick off, as the stock market strives to rebound from the prolonged depression, a bank spokesman said.

Although the market has seen a notable volatility, linear trends show that the market is on the recovery path. We could also expect more activities as the Government's efforts on peace negotiation progresses and the widely expected global economic recovery, starting mid 2002, makes headway, he said.

MBSL midcap stocks have notably outperformed the market ever since it was introduced. Over the last three years, MBSL Midcap index has offered an average return of 15% whilst the All Share Index (ASI) and the Milanka Price Index (MPI) have offered only 4% and 5% respectively. In 2001, MBSL Midcap offered a mammoth 66% return, which is far above the returns of the other two indices, the spokesman said.

"More importantly, it has declined lesser in bear markets and substantially outperformed bull markets - just what equity investors are looking for. The volatility of MBSL Midcap returns has also stayed low."

Institutions such as pension funds, insurance companies and banks which have invested in equity can compare the price performance and risk of volatility of their portfolios with that of the MBSL Midcap index for each of the past three years. In addition to higher returns, these institutions would also like to consider the fact that, allocating a proportion of their portfolios in a different style will provide vital benefits of diversification to their portfolios, he said. 

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Copyright 2001 The Associated Newspapers of Ceylon Ltd.
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