Nabil mutual fund oversubscribed by 4 times

KATHMANDU, March 27:

A mutual fund product launched by Nabil Invest, the investment arm of Nabil Bank, has been oversubscribed by 3.92 times, indicating growing interest for investment vehicles other than stocks and bonds, and setting the ground for other investment banks to introduce such schemes.

Nabil Balanced Fund I launched by Nabil Invest last Wednesday is a mutual fund scheme worth Rs 600 million with five-year maturity period. This is the third mutual fund scheme launched in Nepal so far and second since the promulgation of the Mutual Fund Regulation.

“Since the response was overwhelming we are now raising issue amount to Rs 750 million. This decision is in line with our plan formulated at the time of the launch of the scheme,” a high-ranking official of Nabil Bank told Republica.

One of the reasons for tremendous investor response was the company´s policy of entertaining investment as little as Rs 1,000. “This laid great investment opportunity for retail investors with several thousand rupees,” the official said, adding, around 95 percent applications were received from retail investors.

Nabil Invest received approximately 20,000 applications for the scheme until March 24, the scheme´s early closing date. Of these, around 19,000 applications were from retail investors.

“We are planning to complete allotment of securities within mid-April and distribute ownership certificates subsequently,” the official said.

The units worth Rs 10 each will then be listed on Nepal Stock Exchange, the domestic stock market, where they will be traded like other securities.

Nabil Invest is investing money raised from the public and institutional investors in a mix of securities comprising equity, equity related instruments and fixed income instruments.

The Securities Board of Nepal (Sebon), the securities market regulator, allows mutual funds to invest money raised from public in stocks, shares floated through IPO, treasury bills and bonds issued by Nepal Rastra Bank, government-guarantee bonds, bank deposits and money market instruments, among others.

Among these tools, Nabil Invest plans to invest at least 35 percent of the amount raised from the public in fixed income securities.

With these investments, Nabil Invest plans to give away 12 percent return in the first year of investment, 17 percent in the second year, 18 in the third year, 21 percent in the fourth and 20 percent in the fifth and final year.

On average, expected yield is around 18 percent per annum, the company said.

Source: My Republica