Advantages of Investing in Mutual Funds
Tue, Feb 16, 2016 6:40 AM on Latest, Exclusive, Mutual Fund, Mutual Fund, Featured,
Editor's Note: ShareSansar along with Global IME Capital Ltd, Fund Manager of Global IME Samunnat Scheme-1, is bringing series of article relating to Mutual Fund Literacy. Global IME Samunnat Scheme-1 is floating public issue of Rs 80 crore from 2, 2072.
Professional Management: Managed by expert fund manager
Diversification: Individually, an investor may be able to own stock in a few companies, a few bonds, and have money in a money market account. Participation in a mutual fund, however, allows the investor to have much greater exposure to each of these asset classes.
Convenience: Elimination of the need for individuals to perform detailed and ongoing securities analysis. Affordability : Can be initiated with relatively small initial investment
Liquidity: Can be liquidated easily and quickly Transparency: Gets up to date information about the value of units , information on specific investment made by the mutual fund and the fund manager strategy and outlook
Low transaction cost: Cost-effective brokerage transactions.
Tax benefits: Tax policies on mutual funds have been favorable to investors and continue to be so.
Investor protection: SEBON monitors the operations of the mutual fund.
Role of Mutual Funds in Capital Market
Mutual funds play an important ROLE in promoting a healthy capital market. They provide active support to secondary market and increase liquidity of capital market and bring stability in financial market and economic development. Role of mutual fund can be explained with the help of following points
Mobilizes Savings:The mutual fund market plays a very important role in the economic, financial and social development of our country by channelizing the scattered saving from the middle income group and small investors to the overall development of Nepalese Financial Market and Economy.
New Instrument Of Investing Money: Interest Rates offered by Nepalese Banks rates are low compared to the returns from stock market.Mutual funds provide a new instrument to invest in stock market offering advantages which otherwise is not present in traditional equity stock. For naïve investors not understanding the basics of stock market, mutual funds offer them a new vehicle to enter the stock market.
Protection to Small Investors:- A small investor is not safe in share market. Big market players influence the price of stocks to their own advantages by gaming the market which common small investors fail to judge. Investors of Mutual funds can feel safeguarded as the professionals managing mutual fund do not fall into this trap instead be at the right end of this game. These professionals do not go by the whims and noise created in the market but resort to their own analysis based on fundamental and technical data.
Boost to Capital Market: Mutual fund has become a capital market intermediary. It bridges the gap between retail investors and capital market. The rapid growth of mutual fund industry leads to increased vibrancy of capital market. Good Companies otherwise having difficulties to float their securities in public in the awe of under subscription can now rely on mutual funds to have their shares subscribed. Addition of more mutual funds will inbuilt more beliefs in new companies desiring to float their equity as they will have more institutional clients established with investment purpose.
Promotion of Transparency in Securities Market:
Increasing no of Mutual Funds means increasing institutional pressure to the listed companies to be more transparent and time lenient with their reporting. With more experts in place to identify the loopholes and irregularities in reported statements, it leads to promotion of Fair Reporting and transparency.
Multi-Purpose Service: Mutual funds introduce variety of innovative schemes containing various benefits.
Innovative schemes are designed to meet the needs of different types of investors in terms of investment, dividend distribution, liquidity etc.
Interview: Parash Mani Dhakal, CEO of Global IME Capital: Allotment of Global IME Samunnat Scheme-1 to happen without delay
Global IME Sammunati Scheme-1 to float public issue worth Rs 80 crore
Professional Management: Managed by expert fund manager
Diversification: Individually, an investor may be able to own stock in a few companies, a few bonds, and have money in a money market account. Participation in a mutual fund, however, allows the investor to have much greater exposure to each of these asset classes.
Convenience: Elimination of the need for individuals to perform detailed and ongoing securities analysis. Affordability : Can be initiated with relatively small initial investment
Liquidity: Can be liquidated easily and quickly Transparency: Gets up to date information about the value of units , information on specific investment made by the mutual fund and the fund manager strategy and outlook
Low transaction cost: Cost-effective brokerage transactions.
Tax benefits: Tax policies on mutual funds have been favorable to investors and continue to be so.
Investor protection: SEBON monitors the operations of the mutual fund.
Role of Mutual Funds in Capital Market
Mutual funds play an important ROLE in promoting a healthy capital market. They provide active support to secondary market and increase liquidity of capital market and bring stability in financial market and economic development. Role of mutual fund can be explained with the help of following points
Mobilizes Savings:The mutual fund market plays a very important role in the economic, financial and social development of our country by channelizing the scattered saving from the middle income group and small investors to the overall development of Nepalese Financial Market and Economy.
New Instrument Of Investing Money: Interest Rates offered by Nepalese Banks rates are low compared to the returns from stock market.Mutual funds provide a new instrument to invest in stock market offering advantages which otherwise is not present in traditional equity stock. For naïve investors not understanding the basics of stock market, mutual funds offer them a new vehicle to enter the stock market.
Protection to Small Investors:- A small investor is not safe in share market. Big market players influence the price of stocks to their own advantages by gaming the market which common small investors fail to judge. Investors of Mutual funds can feel safeguarded as the professionals managing mutual fund do not fall into this trap instead be at the right end of this game. These professionals do not go by the whims and noise created in the market but resort to their own analysis based on fundamental and technical data.
Boost to Capital Market: Mutual fund has become a capital market intermediary. It bridges the gap between retail investors and capital market. The rapid growth of mutual fund industry leads to increased vibrancy of capital market. Good Companies otherwise having difficulties to float their securities in public in the awe of under subscription can now rely on mutual funds to have their shares subscribed. Addition of more mutual funds will inbuilt more beliefs in new companies desiring to float their equity as they will have more institutional clients established with investment purpose.
Promotion of Transparency in Securities Market:
Increasing no of Mutual Funds means increasing institutional pressure to the listed companies to be more transparent and time lenient with their reporting. With more experts in place to identify the loopholes and irregularities in reported statements, it leads to promotion of Fair Reporting and transparency.
Multi-Purpose Service: Mutual funds introduce variety of innovative schemes containing various benefits.
Innovative schemes are designed to meet the needs of different types of investors in terms of investment, dividend distribution, liquidity etc.
Interview: Parash Mani Dhakal, CEO of Global IME Capital: Allotment of Global IME Samunnat Scheme-1 to happen without delay
Global IME Sammunati Scheme-1 to float public issue worth Rs 80 crore
