Mutual Funds In Nepal: Every Thing You Need To Know

June 30, 2020 | Investopaper

A mutual fund is a company that pools money from many small as well as institutional investors and invests in stocks, bonds, and other investment securities. It is managed and operated by a portfolio manager. After the issuance of the Mutual Fund Directives, 2067 by the Securities Board of Nepal (SEBON), the mutual funds have started in operation in Nepal. After the issuance of the regulations, class A banks started to establish and operate mutual funds in Nepal. ‘Siddhartha Investment Growth Scheme’ run by Siddhartha Capital Limited was the first mutual fund in Nepal after the directive. It was a closed-end fund with a maturity period of 5 years.


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In Nepal, as per the Mutual Fund Directives 2067, the money collected from mutual funds is invested by the portfolio manager in shares, bonds, government securities, and fixed deposits. The return or profit from such investment is distributed to the unit holders in a proportional manner. An investor purchasing the share/unit of a mutual fund is known as a unitholder. The value of each unit is called Net Assets Value (NAV).


History of Mutual Funds In Nepal

NCM mutual fund, 2050

Before the issue of Mutual Fund Directives, 2067, NIDC Capital Market established NCM mutual fund, 2050 (in 1993/94). This was an open-end fund and had a par value of Rs 10. Later, the fund was converted to a close-end fund and listed in the NEPSE.

Citizen unit scheme, 2052

Likewise, Citizen Investment Trust (CIT) operated Citizen unit scheme, 2052 which was also an open-end fund. Citizen Unit Scheme, 2052 with a par value of Rs. 100 came into operation in the year 1995.  It is an open-end scheme and provides regular income in the form of dividends to the unit holders.


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NCM Mutual Fund, 2059

During the termination of NCM First Mutual Fund, 2050, the fund gave the investors an option to refund or to participate in another new scheme called NCM Mutual Fund, 2059. Thus, all the assets and liabilities of NCM First Mutual Fund, 2050 was converted into NCM First Mutual Fund, 2059. It was a closed-end with a maturity of 10 years and traded at NEPSE.


Types of Mutual Funds In Nepal

There are two types of mutual funds.

1. Open-Ended Mutual Fund

2. Closed-Ended Mutual Fund


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Open-Ended Mutual Fund

The open-end fund is available for sale at any time and is not listed in the secondary market i.e. Nepse. It can be bought and sold at any time on the basis of Net Asset Value (NAV). Open-ended mutual funds can issue shares on the basis of demand. If the investors want to sell their shares, the fund will buy those shares. There is no need to purchase from existing shareholders. The shares of an open-ended fund are priced daily based on their day-to-day Net Asset Value (NAV).

The open-ended mutual fund scheme has just recently begun in Nepal. NIBL Ace Capital Limited is operating Nepal’s first open-ended mutual fund scheme which is known as ‘NIBL Sahabhagita Fund’. NIBL Sahabhagita Fund issued 50 million units at a par value of Rs 10 on Jestha 19, 2076.


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Closed-Ended Mutual Funds In Nepal

The closed-ended fund usually issues a specified number of units for a fixed time period. Closed funds raise money through primary offerings to the general public and institutions. The funds thus collected are listed and traded on the Nepal Stock Exchange (NEPSE). After the expiration of the stipulated time period, the investor gets back the profit including the investment in the unit.

Currently, there are 19 closed-ended mutual fund schemes operating in Nepal. These schemes, as a whole, have collected almost Rs 26.09 billion from the investors and have invested in the shares, debentures, and fixed deposit products. Investors can purchase the units of these closed-end funds from the secondary market of Nepal i.e Nepse.


List Of Close-end Mutual Funds In Nepal

The table below presents the closed-ended mutual funds listed in Nepal Stock Exchange along with their stock symbol.

S.N Mutual Funds In Nepal Stock Symbol
1 Citizens Mutual Fund -1 CMF1
2 Citizens Mutual Fund-2 CMF2
3 Global IME Samunnat Scheme-1 GIMES1
4 Laxmi Equity Fund LEMF
5 Laxmi Value Fund-1 LVF1
6 Laxmi Unnati Kosh LUK
7 Nabil Balanced Fund-2 NBF2
8 Nabil Equity Fund NEF
9 NIBL Pragati Fund NIBLPF
10 NIBL Samriddhi Fund 1 NIBSF1
11 NIC Asia Balanced Fund NICBF
12 NIC Asia Growth Fund NICGF
13 NMB 50 NMB50
14 NMB Hybrid Fund L-1 NMBHF1
15 Sanima Equity Fund SAEF
16 Siddhartha Equity Fund SEF
17 Siddhartha Equity Orineted Scheme SEOS
18 Siddhartha Investment Growth Scheme – 2 SIGS2
19 Sunrise First Mutual Fund SFMF

Listed Shares And Total Paid-Up Value of Closed-End Mutual Funds In Nepal

The table below shows the paid-up value of the mutual funds accumulated from the general public and the institutions in Nepal. Sanima Equity Fund has the largest fund size of Rs. 1.30 billion while Laxmi Value Fund 1 has the smallest fund size of Rs. 500 million.

S.N Mutual Funds In Nepal Stock Symbol Total Listed Shares Total Paid-Up Value (Rs)
1 Citizens Mutual Fund -1 CMF1 82,000,000 820,000,000
2 Citizens Mutual Fund-2 CMF2 56,000,000 560,000,000
3 Global IME Samunnat Scheme-1 GIMES1 100,000,000 1,000,000,000
4 Laxmi Equity Fund LEMF 125,000,000 1,250,000,000
5 Laxmi Value Fund-1 LVF1 50,000,000 500,000,000
6 Laxmi Unnati Kosh LUK 65,262,360 652,623,600
7 Nabil Balanced Fund-2 NBF2 112,000,000 1,120,000,000
8 Nabil Equity Fund NEF 125,000,000 1,250,000,000
9 NIBL Pragati Fund NIBLPF 75,000,000 750,000,000
10 NIBL Samriddhi Fund 1 NIBSF1 75,000,000 750,000,000
11 NIC Asia Balanced Fund NICBF 75,500,000 755,000,000
12 NIC Asia Growth Fund NICGF 83,520,000 835,200,000
13 NMB 50 NMB50 125,000,000 1,250,000,000
14 NMB Hybrid Fund L-1 NMBHF1 100,000,000 1,000,000,000
15 Sanima Equity Fund SAEF 130,000,000 1,300,000,000
16 Siddhartha Equity Fund SEF 150,000,000 1,500,000,000
17 Siddhartha Equity Orineted Scheme SEOS 100,000,000 1,000,000,000
18 Siddhartha Investment Growth Scheme – 2 SIGS2 120,000,000 1,200,000,000
19 Sunrise First Mutual Fund SFMF 860,000,000 8,600,000,000

Why Invest In Mutual Funds Of Nepal?

1. Professional money management

Professional fund managers who are actively involved in the field of investing, manage mutual funds. With adequate knowledge, analytical tools, and strategy, they can make the wise investment decision than the average investors.

2. Minimum Investment

Mutual Funds are easily affordable. One can purchase 100 units of the scheme at a mere Rs 1000. You don’t have to make huge investments in mutual funds. You can always start small.

3. Diversification

Investors can easily diversify their investments while investing in mutual funds. Even with a small capital, he/she can put money in the funds. The funds then make investments in various investable securities. Thus, diversification is possible.

4. Liquidity

The next advantage of the mutual fund is its liquidity. Any investors willing to sell their mutual fund units can directly sell to the fund (Open end) or in the stock market (Closed-end). Thus, the investment made in mutual funds is highly liquid.

5. Low transaction cost

The transaction cost which buying/selling mutual funds is also relatively low. If the fund is closed-end and traded in the stock exchange, then the transaction cost amounts to the same as share trading. Likewise, while selling to the funds directly, as in the open end, the cost may be as per the fund manager.

6. Safety

Mutual Funds are comparatively safer than other investments. They are highly diversified. Likewise, the Securities Board of Nepal (SEBON) regulates any misdoings by the fund managers.


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Minimum Requirement To Operate Mutual Funds In Nepal

The minimum requirement to operate mutual funds in Nepal are:

1. Minimum paid-up capital of Rs 1 billion

2. Minimum 5 years of service in relevant field

3. Minimum 3 years of continuous profit

4. Appointment of at least 5 fund supervisors, a fund manager, and a depository

5. License requirement for fund manager and depository.


Structure Of Mutual Fund In Nepal

The structure of mutual funds in Nepal is as follows:

Fund sponsor (e.g. Nabil Bank Limited)

Fund manager (e.g Nabil Investment And Banking Limited)

Fund supervisor Depository (e.g Nabil Investment And Banking Limited)

Mutual fund (e.g. Nabil Balanced Fund-2)


Fund Managers In Nepal

The table below presents the list of fund managers in Nepal. They have received the license to operate mutual fund schemes.

S.N. Fund Managers In Nepal
1 CBIL Capital Limited
2 Global IME Capital Limited
3 Laxmi Capital Limited
4 Nabil Investment Banking Limited
5 NIBL Ace Capital Limited
6 NIC Asia Capital Limited
7 NMB Capital Limited
8 Sanima Capital Limited
9 Siddhartha Capital Limited
10 Sunrise Capital Limited

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10 thoughts on “Mutual Funds In Nepal: Every Thing You Need To Know

  • September 2, 2020 at 2:17 pm
    Permalink

    Euta mutual fundcha jasko maturity period 10 year pachi huncha ra tyo Mutual Fund ma secondary market bata 2 years ma kehi share ra arko 5 year ma arko kehi share haru gari alag alag date ma lagani garyo vane tyo date anusaar kati bela return aucha sir ? Plz batai dinu hola.

    Reply
    • December 17, 2020 at 3:28 pm
      Permalink

      You need to calculate the holding period return of these two mutual funds ( purchased in different time horizons). You may consider load fees, dividends, capital gains, etc to calculate your return on these two mutual funds. HPR=[(NAV-NAVt-1)+CGt+D1]/NAVt-1

      Reply
  • January 19, 2021 at 11:48 am
    Permalink

    After the maturity period of the mutual fund, ie: NMB Hybrid fund-7 years. what is the value of the share in relation with the shareholder after the maturity time?? Or after the maturity time this share no longer exist??

    Reply
    • May 15, 2022 at 7:53 am
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      I want to invest in sip first time. what to do for this? I have demat account and mero share too.

      Reply
  • August 4, 2021 at 10:14 am
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    Maile mutual fund ko 100 it takes 1997 agadi kine thiyen
    Tesko karat harayo aba kasailai thaha parne ke kati bhayera ?

    Reply
  • September 9, 2021 at 12:03 am
    Permalink

    Give right guidance for beginners in close end mutual funds:
    1. What to do when close end of is alloted to u ?
    2. How to know close end mf where they invested?
    3. What are commission for broker as well as how to sell the unit after fixed time period
    4. How to calculate the profit?
    5. What is return value of per unit after time period for 10 years?

    Reply
    • October 18, 2021 at 11:40 am
      Permalink

      Mutual fund allotted vaye paxhi k hunnxa Ra k garnu parxa vanidinuna.

      Reply
      • October 19, 2021 at 3:47 am
        Permalink

        After mutual fund is allotted, it gets listed on NEPSE (if it is closed ended fund). After that you can buy or sell the units of the scheme.

        Reply
        • February 14, 2022 at 8:06 am
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          Show me the weekly price of Siddhartha equity fund

          Reply
  • March 14, 2022 at 3:16 am
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    suppose i have invested 1lakh for 1 mutual fund it has declared to provide 200% return after 10 years how much return i can gain? sir

    Reply

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