Mutual fund industry prefers deposit over NEPSE; industry prefers shares starting with initial “N” in NEPSE

Mon, Nov 5, 2018 3:44 PM on Exclusive, Financial Analysis, Stock Market,

Mutual funds in Nepal are operated with the professionalism and proficient skills, accuracy and research of investment experts in the country. The institutional investors claim to hold no such emotional attachment with any of the stocks. However, coincidently, as of Aswin, out of top 10 invested stocks by mutual funds, 7 stocks belong with stocks starting from initial “N”.

It is of no doubt that the stocks have been chosen based on the company’s fundamental performance, long run growth and even technical proficiency. Let us see the top companies with top most investment in the industry:

NABIL’s Promoter Shares have the highest amount of investment value worth Rs 32.64 crore followed by Nepal Bank Limited with value worth Rs 31.81 crore and NMB Bank Limited with investment value worth Rs 29.27 crore by the overall mutual fund industry. The total amount of investment made in securities by mutual funds as of Aswin is Rs 6.46 arba whereas that of Bhadra is Rs 6.72 arba.

Although mutual funds have preferred these stocks for investment yet the funds are seem to be switching towards banking deposits from investment in securities. The major reason for this switch can be attributed to two reasons: i) The scheme of the mutual funds ii) The bearish mood of NEPSE.

Provided that the NEPSE is still in the bearish trend, it is not simply individual investors who are reluctant to enter the market but also the institutional investors. For instance, among the 13 mutual funds, 7 mutual funds have decreased their investment in listed securities. Similarly only two mutual funds namely Citizen Mutual Fund and Siddhartha Equity Fund have increased their NAV slightly. Moreover, only one mutual fund has NAV above 11 i.e. NMB Sulav Fund

The market has been divided into two parts where individual investors criticize that institutional investors have to take a responsibility for the decreased market. In such cases, critics claim that mutual funds should play a role to motivate investors by coming into the market rather than depositing the capital in the bank account. On the other side, mutual advocates believe that their investment decision should be guided by the voice of team and an investment system that they have developed. Thus, being carried away by emotions would further hurt their business and question their analysis.

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