Mutual Funds v/s Portfolio Management Services

By:Kriti Capital & Investments Ltd.

Ravibhawan, Kathmandu, Nepal

Mutual Funds

• Pool money from large number of investors• Stocks owned by the fund in its name• Use management expertise to provide returns as per the

common investment policy• Can be close-ended and open-ended

– Close-ended: Fund matures after prescribed period– Open-ended: Fund has infinite lifetime (theoretically)

Portfolio Management Services

• One to one agreement between investors and Portfolio Manager

• Customized portfolio as per the risk profile of investors and hence accordingly individualized investment decisions

• Bank account and stocks are held under investor’s name • Can be sold at market value at any time• Regular report on investor portfolio value is provided to

investors• Expertise of Portfolio Manager (fundamental and technical) in

making investment decision

Mutual Funds v/s

Portfolio Management Services----------------

The Differences

Investment Policy

Mutual Funds Portfolio Management Services

• Common policy and strategy for all the investors under one scheme

• One-size-fits-all philosophy• No say in investment

decisions

• Customized policy and strategy for each investor

• Match individual risk appetite with investments decisions

• Will have say in investments through agreed Investment Policy Statement

Investment Amount

Mutual Funds Portfolio Management Services

• Investors can invest at minimum of one unit of the scheme

• In Nepal, the two schemes currently active have par value at NPR 10

• Minimum investment amount as prescribed by regulatory body (SEBON)

• Individual: NPR 3 lakhs• Institutions: NPR 5 lakhs

Transaction Volume and Price Sensitivity

Mutual Funds Portfolio Management Services

• Transactions usually in huge volumes

• Prices of the securities are affected by the huge volume of buy/sell

• Transaction volume depends on client portfolio size (usually far less than of MFs)

• Prices more or less remain the same

Market Value of Investment

Mutual Funds Portfolio Management Services

• Usually trade in market at below-NAV values

• Market price of units is below the value of underlying asset

• Don’t trade as MFs• Market Value of investment

(while selling) is same as the value of underlying asset

Benefits

Mutual Funds Portfolio Management Services

• Nepal Government has benefited MFs with capital gain tax waiver in their transactions

• However, capital gains at the sell of the units are taxed

• Tailored and beneficial for small investors

• Individual capital gain tax are not waived

• No further taxation• Appropriate for active

investors willing to make fairly large investments and hence need customized services

Do you want to avail PMS Services in Nepal ?

Kriti Capital is a public limited company and has been

providing PMS services in Nepal

Why Kriti Capital ?

• Licensed by SEBON to provide PORTFOLIO MANAGEMENT SERVICES

• Cumulative experience of over 15 years in capital markets• International experience in capital markets

• Portfolio has grown to NPR 17 crores (approx USD 1.8 million) under management (as of May 2014) and growing

• Actively involved in Venture Financing/Private Equity investments

Why PMS at Kriti Capital?

• Well qualified and dedicated team• Kriti is an independent company promoted by professionals• No exit fees• Low fixed costs• Incentive based pricing -> mutual growth

Why Kriti Capital?

• Explore capital markets of Nepal through us• Active fund management services• Provide wider ambit of Investment banking services in Nepal

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