“We believe that our seasoned analysts will be able to deliver better returns and appropriately manage the fund collected through the scheme”

Rajiv Sapkota, Chief Executive Officer of Laxmi Capital, holds a Master of Science in Business Administration from Saint Louis University, Philippines.  He has a wide ranging experience in Nepal’s banking sector. He started his career in banking as a junior officer at Himalayan Bank and then served at Sunrise Bank as deputy manager before joining Laxmi Bank as senior manager. At Laxmi Bank, he held various positions and rose through the ranks to become the CEO of Laxmi Capital.

As Laxmi Capital forays into Mutual Fund, launching Laxmi Value Fund-1, a close ended mutual fund scheme, ShareSansar caught up with Mr. Sapkota to understand the vision behind Laxmi Capital and learn about its first mutual fund scheme.


What are the special features of Laxmi Value Fund-1? What will the fund’s priorities be and what dividend plan do you have?

Laxmi Value Fund-1 is a close ended Mutual Fund scheme targeted primarily to retail investors. Therefore, we expect investment of people from every walk of life. As a Fund Manager, we plan to invest in balanced manner in both equity as well as fixed income instruments that shall help generate attractive returns to the investors.


Is your entry into mutual fund just a jump on the bandwagon or do you have strong justification for entering into the fray? How will Laxmi Mutual Fund be different from other mutual fund companies in the market?

Though we were a little late to enter into the market, we feel that we have been able to leave good impression in the customer’s mind by way of steadily promoting our existing product -- Portfolio Management Services since the last three years. We already have a pool of trained human resources having good knowledge of the Nepalese market dynamics. Hence, we believe that our seasoned analysts will be able to deliver better and appropriately manage the fund collected through the scheme.


Although it might be too early, still can you make any forecast for Laxmi Mutual Fund’s NAV for a period of 6 months or a year from now?

The stock market movement is determined by numerous factors which could trigger unexpected changes beyond our control. Moreover, with our team having understood technicals as well as fundamentals of the market behavior with their knowledge and experience, we believe that we should be able to deliver competitive returns to the investors over the period.


Is the presence of so many mutual fund companies sustainable in terms of profit for investors in a small market like Nepal?

With its advantages like risk diversification, economies of scale with tax benefit, divisibility, liquidity and professional management, mutual fund as an investment vehicle always provides better benefit to the investors as well as aid in overall improvement of the securities market of the country. Presence of institutional investors has always been a top priority for our stock market for its sustainable growth. While presence of individual investors is also important in the securities market, long term growth in balanced manner can be expected if we could strike appropriate balance between the institutional as well as individual investors. As mutual funds schemes have sizeable funds that can be invested for relatively longer period vis-à-vis funds of short term nature, it can always be expected that their presence would bring maturity in the market and its behavior.


Are you happy with the pace and the way the mutual fund sector is growing?

As pointed out earlier, presence of Mutual Fund schemes can be linked with sustainable growth of the market. Therefore, the institutional investors like mutual funds would add value in the market.  


How aware are individual investors about the mutual fund option?

Individual investors are seen to be more aware with regards to Mutual Fund schemes as one of the prominent investment options. Since there are already a number of such performing funds operating in the market, we feel that a segment of potential retail investors for mutual funds do exist. Awareness programs, promotions, publicities in digital media like yours would certainly help increase the market coverage and number steadily.


What are the steps that the private sector and government need to take to allow the mutual fund industry to flourish?

Capital market is one of the major sources of funding for any project(s). Raising funds through Capital Market is very prudently and widely used all over the world. In fact, the growth in Capital Market is considered as one of the key economic indicators world wide.

Though a number of private companies have raised funds from the capital market in Nepal in the past, few of them could not perform well due to numerous reasons and the general investors’ faith in subscribing their equity could have been affected to some extent. Having said that, there are also companies who have performed well and provided good returns to their investors. Taking their performance as a benchmark and with deeper commitment, many industrial units should now step in the equity market for arranging long term funds. We have seen many hydro companies already entering this market while other industries are yet to explore this option. Their induction in the stock market could work to ensure sustainable market growth. This would allow more mutual fund schemes to come into the market with wider array of investment propositions.

Further, if the government could work out an appropriate way to allow tax exemption in individual’s investment in Mutual Fund as in the case of investment in Life Insurance Policy, it would attract more individual investors to the mutual fund market and help improve the securities market’s long term growth and sustainability.


What is your take on current NEPSE growth? Will it go further or is it just a bubble about to burst any time?

As covered earlier too, sustainable stock market growth is determined by many factors. Even though many listed companies have been announcing on an average 10-15% returns to the equity investors over the years, the market could not sustain at the level it had reached earlier. However, there are some signs of improvement in the recent past. If this trend continues along with implementation of few of the announced development projects bringing in growth in infrastructure sector(s), we will surely be witnessing positive impact in equity market as well. As the investors have observed stock price bubble in the past, many of them are now well aware of the risks and market dynamics. Therefore, sustainable market growth with long-term proposition is inevitable.