The Most Difficult Part Has Already Been Done; What Follows Is Growth: An Interview with Bijaya Lal Shrestha, CEO at LS Capital

Laxmi Sunrise (LS) Capital Limited is set to revolutionize investment opportunities with the launch of its new mutual fund– the LS Horizon 12. Scheduled for issuance from today. i.e., on Baisakh 30^th to Jestha 4^th 2083 5, this close-ended mutual fund aims to generate moderate steady returns by strategically investing in various financial instruments as per prevailing rules and regulations. With an IPO size of NPR 1.20 billion, expandable up to NPR 1.50 billion if oversubscribed, the LS Horizon 12 presents a unique investment opportunity, expected to give a stable return due to a 12-year maturity period which can absorb short cyclical market fluctuation shocks, making it among the longest in Nepal's current landscape of close-ended mutual funds. The fund's diversified asset allocation strategy, ranging from equity and fixed deposits to fixed-income instruments, alternative investments, and cash equivalents, positions it as a versatile and balanced investment avenue for both seasoned and novice investors.

Public Issue of "LS Horizon 12" Mutual Fund Scheme Opening From Today

Mr. Bijaya Lal Shrestha

Chief Executive Officer at LS Capital Limited

1. Sir you, (LS Capital Limited) Could you briefly introduce LS Horizon 12 and highlight its key features for our audience?

LS Horizon 12 is a closed-end mutual fund scheme launched by LS Capital (Laxmi Sunrise Capital), with Laxmi Sunrise Bank as the sponsor. The fund has a total size of NPR 1.20 Arba, divided into 12 crore units with a face value of NPR 10 per unit.

With over 30 years of experience, LS Capital is a pioneer in Nepal’s capital market. The company currently manages multiple mutual fund schemes, including six active funds and several that have already matured. This long track record reflects strong research capability, deep market insight, and a disciplined investment approach focused on long-term value creation. The name “LS Horizon 12” reflects both the brand identity and the 12-year investment horizon, which allows for strategic investing and compounding over time.

2. Why a 12-year closed-end fund? What is the rationale behind this longer maturity period?

Most closed - end funds in Nepal typically range from 7 to 10 years. However, a 12 - year horizon better aligns with long - term wealth creation in a developing market like Nepal.

This extended period allows the fund to pass through multiple market cycles. With proper analysis and diversification, these cycles can be effectively capitalized on. It also encourages disciplined investing and reduces the tendency to react to short-term market fluctuations.

3. How does investing in LS Horizon 12 differ from direct stock investing, and why does mutual fund invest matter for the average Nepali investor?

When investing directly in stocks, individuals bear company - specific risks entirely on their own. In contrast, a mutual fund pools resources and invests across a diversified set of assets. In LS Horizon 12, investors own units of the fund rather than individual securities, and benefit from professional management, diversification, and regulatory oversight.

The performance data from Nepal’s mutual fund industry makes a compelling case for this approach. Of the 43 listed closed - end fund schemes in Nepal, only few schemes have an NAV below the par value of NPR 10 the overwhelming majority are trading above par. Among the 14 open - end funds schemes, only 1 scheme has an NAV below NPR 10. On top of this, many funds are distributing annual dividends to unitholders.

In contrast, many individual investors continue to struggle with stock selection, inadequate diversification, and emotional decision-making outcomes that frequently result in value destruction rather than creation. This is precisely where the mutual fund proposition becomes compelling. The data clearly shows that a diversified, research-backed approach, managed by an experienced investment team, is a more reliable path to long-term wealth creation than unsupported stock picking. At LS Capital, our investment team and research framework are designed exactly for this purpose.

4.What is the asset allocation strategy of the fund?

The fund aims to balance growth and stability through diversification. It will primarily invest in equities listed on the Nepal Stock Exchange, along with fixed-income instruments such as government bonds, treasury bills, corporate debentures, and fixed deposits. This diversified allocation helps reduce volatility while targeting consistent returns, with the flexibility to adjust allocations based on market conditions.

To put this in context, fixed deposits with commercial banks are currently offering returns in the range of 3 to 4% per annum, while government securities provide somewhat higher yields depending on the tenor. Against this backdrop, a balanced fund combining equity exposure with fixed-income instruments is well positioned to deliver returns that meaningfully exceed traditional savings products over the long term. The fixed-income component provides stability and capital preservation, while the equity allocation drives growth together offering investors a professionally managed, diversified alternative well suited to Nepal’s current interest rate environment.

5. Who is LS Horizon 12 designed for, and how can interested investors participate in the scheme?

Investors can participate in the scheme through MeroShare and ASBA member banks during the public offering period, in accordance with applicable regulatory guidelines.

LS Horizon 12 is particularly suitable for long-term investors seeking a professionally managed investment portfolio especially individuals who may not have the time or expertise to actively manage investments on their own. This includes young investors, salaried professionals, and institutional participants.

Furthermore, once listed on the Nepal Stock Exchange (NEPSE), the fund units can also be traded in the secondary market, providing investors with additional liquidity and flexibility.

6. How is LS Horizon 12 differentiated from your existing funds, and what else is in the pipeline?

LS Horizon 12 stands out primarily due to its 12-year tenure, making it one of the longest-duration funds in Nepal. This longer horizon enables investment in opportunities that require time to unlock value, including long - term debt instruments and select equities, and it follows a balanced allocation strategy offering a different risk-return profile compared to equity-focused funds.

Looking ahead, we are developing what we internally refer to as the Opportunity Fund a product designed specifically to capture value in medium- and low-market capitalization stocks listed on the Nepal Stock Exchange. These segments have historically received less institutional attention yet carry significant growth potential. Based on our research and historical NEPSE data, mid- and low-cap stocks have demonstrated the capacity to deliver strong returns across full market cycles, though with higher volatility and lower liquidity than large caps. The projected risk-return profile for such a fund targets a gross return of 22 to 28% CAGR over its investment horizon, suited to investors with a higher risk appetite and a long-term outlook.

7. How do you assess Nepal’s current investment climate, and why is now a good time to launch?

Nepal’s investment environment is evolving positively. Declining interest rates have made traditional savings instruments less attractive, encouraging a shift toward capital markets. Historically, the Nepal Stock Exchange has delivered average annual returns of around 12 to 13% at the index level over the long term.

From a timing perspective, the NEPSE index peaked at over 3,200 points in 2021 and has since undergone a meaningful correction, bringing valuations back to more attractive levels. Historical patterns consistently show that investors who enter during or following such corrections are rewarded over a 10 to 12-year horizon. The current macroeconomic environment characterized by declining rates and improving banking system liquidity further supports a shift toward capital market instruments. A closed-end structure is particularly suited here, as the fixed capital base allows the fund to remain invested through short-term volatility and fully participate in eventual market recovery.

It is also worth noting where Nepal’s mutual fund industry stands today. The industry has grown from NPR 13.6 billion in AUM in 2019 to nearly NPR 73 billion by 2026 more than 5x growth in under seven years. Of the 14 mutual fund schemes that have reached maturity, 11 outperformed the NEPSE index, delivering an average annual return of 15.76% against the NEPSE’s comparable period returns, and well ahead of the average fixed deposit rate of 8.57% over the same period. That performance record is not an accident; it reflects the value of structured, research-backed investing in Nepal’s capital market.

8. How will liquidity be managed in this closed-end fund?

Once listed on the Nepal Stock Exchange, investors can buy and sell units in the secondary market, ensuring liquidity during the fund’s tenure. As maturity approaches, the portfolio will be liquidated in a phased manner to minimize market impact. Any remaining unlisted investments will be auctioned, and proceeds will be distributed to investors efficiently.

9. What are the key risks, and how are they managed?

The primary risk is market risk asset values fluctuate based on economic and company - specific factors. Risk is managed through diversification, rigorous research, and continuous monitoring. The long - term horizon also helps mitigate short - term volatility. Additionally, the fund follows a structured framework addressing liquidity, credit, and operational risks, with dedicated Investment, Risk Management, and Audit Committees ensuring disciplined oversight.

10. How will transparency and governance be ensured?

The fund will regularly publish Net Asset Value and detailed monthly reports outlining portfolio holdings and asset allocation. Strong governance is ensured through dedicated Investment, Risk Management, and Audit Committees. These frameworks ensure transparency, accountability, and ethical practices in all aspects of fund management.

11. What is your long-term vision for LS Capital and Nepal’s mutual fund industry?

Nepal’s mutual fund industry remains at an early-stage relative to its potential. AUM currently represents approximately 1.2% of GDP and 1.5% of NEPSE’s market capitalization compared to 19% of GDP in India. The runway for growth is substantial. At NPR 5% AUM penetration a level India surpassed years ago the industry would need approximately NPR 305 billion in assets. At 10%, that rises to NPR 610 billion. That capital flows directly into businesses, infrastructure, and Nepal’s broader economic development.

At LS Capital, our vision is to be a trusted long-term investment partner for every Nepali investor. LS Horizon 12 reflects this commitment through a disciplined and diversified approach to wealth creation. Going forward, we remain focused on expanding our product offerings, strengthening our research capabilities, and contributing meaningfully to the development of Nepal’s capital markets.

The most difficult part building investor trust, demonstrating consistent returns, and establishing the regulatory foundation has already been done. What follows from here is growth.