Understand why mutual funds are best in falling market: Most mutual funds NAV fell less than market during two major declines in NEPSE last year
Tue, Nov 21, 2017 7:00 AM on Latest, Exclusive, Mutual Fund, Featured, Stock Market,
Mutual Fund is a pool of fund generally of several small and big 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). Such investment decisions are made by a Fund Manager and supervise by the fund supervisors. Returns from the investment are shared proportionately among the investors on the basis of the units held by them.
Within the short time of its inception, Mutual Fund proved to be one of the most lucrative investments for small and risks avert investors of Nepal. Mutual fund has already become one of the best alternatives for investment and also they are providing healthy return each year from its establishment.
Here we try to understand the relationship between Mutual fund NAV and NEPSE index during the two major fall in last one and half year period. Interestingly, data shows that there are fewer declines in NAV of most of the mutual funds compared to fell in NEPSE index. This means that the investors have incurred less loss if they have invested on mutual funds during the review periods.
Comparison between NEPSE Index and NAV of mutual funds (Shrawan 12- Falgun 1, 2073)
Comparison between NEPSE Index and NAV of mutual funds (Chaitra 29, 2073- Kartik 23, 2074)
In present context of Nepal, investors are becoming more aware about mutual fund schemes. Large units of mutual fund are being traded on NEPSE. However, mutual funds are not risk-free as they also invest in stock market. Since Nepali stock market is especially volatile and susceptible to rumors, it is also necessary to understand about market volatilities before investing in mutual fund.
However, since mutual funds do not invest 100% of their fund in stock market, the market risk is greatly reduced as compared to someone who only invest in equities.
Mutual funds are doing very well in Nepal and providing good return each year. Investors who have very less knowledge about market and want less risk can invest in mutual fund and earn good return in long run.
Comparison between NEPSE Index and NAV of mutual funds (Chaitra 29, 2073- Kartik 23, 2074)
In present context of Nepal, investors are becoming more aware about mutual fund schemes. Large units of mutual fund are being traded on NEPSE. However, mutual funds are not risk-free as they also invest in stock market. Since Nepali stock market is especially volatile and susceptible to rumors, it is also necessary to understand about market volatilities before investing in mutual fund.
However, since mutual funds do not invest 100% of their fund in stock market, the market risk is greatly reduced as compared to someone who only invest in equities.
Mutual funds are doing very well in Nepal and providing good return each year. Investors who have very less knowledge about market and want less risk can invest in mutual fund and earn good return in long run.
