Mutual Funds in NEPAL
Presented by:RUPESH NYAUPANEMutual Funds in NEPAL
Introduction
Investment company/financial intermediaries that collect money
from many small investors and invest that money in different
areas.Small investor who purchase securities individually are
difficult, mutual funds makes it easy.Fund is managed by investment
expert known as portfolio manager.
Historical development of mutual fund:First appeared in
nineteenth century as a way for small investor to invest in
corporate equities.The first investment company: Scottish- American
investment company. (1860).In 1875 there are 50 investment company
in BRITAIN. Many of them failed in the stock market crisis of
1890.
Cont..In 1920s, investment companies are important in the U.S. (
at the time of BOOM)in 1923 , small investor rushed to get in on
the action, mutual fund are increased. by 1929, there were 400
companies. most of these are closed end companies.In 1929 and 1933
stock market collaps.
Cont 1930s relatively rapid growth of open end companies are
developed. 1964, unit trust of India was established by the Indian
government.
ContInvestor subscribing the share/unit of mutual fund is known
as unit holder.Value of each unit is called Net Assets Value
(NAV).Does not guarantee any dividend.Mutual funds are like
depository institutions, but it represent partial ownership.
Why should we invest in MFProfessional
management.Diversification.Affordability. Liquidity. Low
transaction cost.Investor protection: SEBON monitor the operation
of the mutual fund.
Mutual fund structure:Closed end mutual fund: A investment
company with a fixed number of share outstanding. it is traded at
organized stock exchange. it is traded at market price. its share
are less liquidate. fixed maturity period ( 5 to 15).
ContOpen end mutual fund: A company that stands ready to buy or
sell its shares at the current Net Assets Value at any time.No
maturity period.It is redeemable at any time. it issues shares in
continual basis, so its number of share is varies.It is more
liquidate.
Net Assets ValueA mutual fund net assets value per share is
equal to total market value of all the mutual funds minus
liabilities divided by the funds total number of share
outstanding.
NAV= (total values of securities- liabilities)/share
outstanding.
Cost of investing in mutual fundLoad fund: commission paid at
the time of a fund purchased.Back end load: commission paid when a
fund is sold.Operating expenses: cost incurred by mutual fund in
operating the portfolio. (0.2% to 2%)12B-1 fee: an annual marketing
or distribution fee on a mutual fund.
History of mutual funds in Nepal NCM mutual fund, 2050: issued
by NIDC capital market in 1993/94. open end fund.Citizen unit
scheme, 2052: issued by citizen investment trust open end fund.NCM
mutual fund, 2059: converted into closed end with maturity of 10
years. Traded at NEPSE.
In 2067, mutual fund regulation 2067 has introducedSiddhartha
mutual fund is the first mutual fund company: Siddhartha investment
growth scheme-I life 5 years. closed end type.
ContNabil mutual fund came out with nabil balanced fund-I closed
end type maturity period of 5 years face value Rs 10 per unit.
Structure of mutual fund in nepal
Regulations of SEBONMinimum paid up capital- 1 billionMinimum 5
years of service in relevant fieldMinimum 3 years of continuous
profit.Appointment of at least 5 fund supervisor, a fund manager
and a depository. license requirement for fund manager and
depositary.
Fees and deposits:Fund supervisor : 0.5% of NAV. fund manager :
2 % of NAV.5% of the charge to be submitted to SEBON.Mutual fund
application fee Rs 50000.
Current NAV of Siddhartha mutual funddateNAV
value2072-10-1512.892072-10-812.6372072-09-3012.6362072-09-2412.3862072-
09-1712
Thank you
