Mutual Fund is a collecting small fund into one pool with an objective of maximizing the profit by lowering risk.
Mutual Fund is a pool of fund generally of several small investors. The collected fund is then invested in financial instruments such as Stocks, Bond/Debentures, Govt. Securities, and Fixed Deposits (as prescribed by Mutual Fund Regulation, 2067 in case of Nepal). Such investment decisions are made by a team of experts, namely Fund Managers. Returns from the investment are shared proportionately among the investors on the basis of the units held by them.
This article covers Net Assets Value (NAV), discounted or premium of Market Price (MP) with respect to NAV, investment areas and fund management fee as taken by the fund or scheme managers. Below data are extracted from the NAV report as published by the respective mutual funds till the end of Magh, 2074:
NAV simply refers to the net value of the units of mutual fund. It is difference between total assets and total liabilities divided by total number of units.
Above bar diagram shows that one of the oldest mutual fund after recently matured Siddhartha Investment Growth Scheme – 1 (SIGS1), Nabil Balanced Fund – 1 (NBF1) leads the mutual fund industry with excellent NAV of Rs 18.03 which is around 80% more than its par value. NIBLPF (NIBL Pragati Fund) stood at bottom of the diagram with Rs 8.73 NAV, which is around 12.7% lower than par value.
The average NAV of the mutual fund stood at Rs 11.17 per unit.
- See which mutual funds are traded at Discount or Premium:
Ongoing bearish trend in the existing Nepal Stock Exchange (NEPSE), some of the mutual funds are still best to include in the portfolio. It would be better if one buys units of mutual fund whose NAV is greater than MP, it simply means that investors can buy at discounted rate, and units of mutual fund whose NAV is lower than MP signalizes that investors are paying more rate than its actual value.
From the above table, it is concluded that out of 12 mutual funds, half of the funds are being traded at discount, which means that MP of those are lower than NAV. To buy discounted funds would be wiser decision if one wants to buy mutual funds units. NBF1 is being traded at discount of 10.26%, followed by NMB Sulav Investment Fund (NMBSF1) with discount of 8.93%. Sanima Equity Fund (SEFU) has been listed but trading has not yet started. Its NAV has slightly diminished than its par value by Rs 0.04 per unit. NIBLPF stood at the last as the MP of it is higher than its NAV by 7.11%.
Investing in various financial instrument is one of the vital role of mutual funds to gain more and more incomes. They are the one who deeply analyzed and invest in the sector where there is high profits.
Above 12 mutual funds has fund size of Rs 12.05 arba, out of which mutual funds have invested in listed shares of worth Rs 5.85 arba and in unlisted shares around Rs 48.31 crore has been invested. Likewise, mutual fund have diversified their investment in debentures and fixed income instrument of worth Rs 75.74 crore and Rs 1.95 arba respectively. Still, there remains Rs 4.86 arba of bank balance which are yet to be invested.
NIBSF1 has invested Rs 85.68 crore in listed shares, which is followed by SEOS with Rs 78.04 crore. NMBHF1 has invested Rs 54 crore in fixed income instrument which clarifies that funds has applied safe side policy.
- Scheme Manager & Depository Fee and Fund Supervisor Fee:
These are the expenses of the funs which are taken for the operation of the funds by the fund or scheme managers.
(Note: Amount of expenses are in Rs crore and are till the end of Magh, 2074 which are going to increase more in upcoming days.)
NBF1 has made 3.19% expenses of its total fund size. This expenses amounts to Rs 2.39 crore. Higher these expenses, lower will be the NAV and vice versa. SEFU newly listed mutual fund has only made expenses of Rs 42 lakh.
