Siddhartha Capital Limited has published an offer letter to issue "Siddhartha Systematic Investment Scheme". The issue will open today, i.e. 16th Ashar, and close on 20th Ashar, 2078. If not subscribed by the early closing date, the deadline can be extended till 30th Ashar.
2 crore units will be issued at Rs 10 face value each. 5% of the initial issue size has been allocated for the issue manager Siddhartha Capital and 10% to fund promoter Siddhartha Bank.
Investors can apply for a minimum of 100 units to a maximum of 20,00,000 units.
This is the fifth mutual fund scheme of Siddhartha Capital, two of which have matured already. The other two mutual funds, Siddhartha Equity Fund (SEF) and Siddhartha Investment Growth Scheme 2 (SIGS2) are close-ended funds and are currently trading in NEPSE.
ICRA Nepal has rated the fund manager AMC3+. This rating indicates an adequate assurance of the fund management quality. To avoid conflict of interest among the fund schemes manager, the fund manager Siddhartha Capital separately appoints independent fund management officers for each mutual fund scheme.
The features of Siddhartha Systematic Investment Scheme (SSIS) are:
- Dividend Re-investment Plan
- Dividend Option
- Growth Option
- Systematic Investment Plan (SIP)
- Purchase/Redemption on daily Net Asset Value (NAV)
Being an open-ended fund, SSIS allows investors to enter and exit from the scheme anytime after the New Fund Offer (NFO). The scheme does not have any limitation on the number of units that can be issued. The increase in units of the scheme is created when an investor invests his/her investments in the fund. However, this also means that the fund will not be traded in NEPSE.
Similarly, when an investor redeems their units, the units are taken out of circulation. SSIS allows the investors to make stipulated investments in the scheme with the option of Systematic Investment Plan (SIP), while close-ended funds do not facilitate such kinds of investments. SIP is an investment tool which allows an investor to invest a specific amount regularly in the mutual fund scheme. SSIS’s SIP will allow investors to save regularly with a smaller amount of investment, and likewise, an investor need not worry about the timing of the stock markets when investing, as they will benefit from both the bullish and bearish market trends.
Furthermore, the fund allows investors to choose the option between Growth Option and Dividend Option. A Growth Option is one where an investor provides a mandate to the Fund Manager to reinvest the yearly dividends distributed by SSIS back again to SSIS through additional units purchased, while a Dividend Option is where the yearly dividends are transferred to the unit holders.
The issue manager claims the major purpose of this scheme is to create an ideal investment solution for investors seeking long-term wealth generation and creating a saving habit for a specific long-term endeavor, such as retirement saving, higher education for children, etc.
To date, Siddhartha Capital has successfully managed to float four closed-end Mutual Fund Schemes worth NPR. 4.20 billion while successfully redeeming two schemes; Siddhartha Investment Growth Scheme 1 (SIGS1) and Siddhartha Equity Oriented Scheme (SEOS) providing an annual return of 48.5% and 13.60% respectively.
Currently, the capital has been managing two close-end equity-oriented schemes raised for a period of 10 years; Siddhartha Equity Fund (SEF) and Siddhartha Investment Growth Scheme 2 (SIGS2). The current NAV of SEF and SIGS2 stands at NPR. 17.12 and NPR. 17.49 respectively.
Click to view the offer letter