What are the factors delaying new mutual funds?
ShareSansar, March 21:
It’s been months, if not years, since we heard about more mutual funds in the offing. So far, however, a mutual fund launched by the merchant bankers of Nabil and Siddhartha Banks are the only two such schemes in the market.
The market was abuzz about two five-year mutual funds to be launched by NMB Capital Limited and Siddhartha Bank Limited: NMB Sulabh Investment Fund worth Rs 60 crore and a new close-ended equity-oriented scheme worth Rs 80 crore of Siddhartha Capital Limited.
The merchant banking arms of Laxmi Bank, Global IME Bank and NIBL had also sought SEBON’s approval for their schemes way back in early 2013.
Laxmi Capital is vying to launch Laxmi Value Fund, which is again a five-year closed-end balanced fund worth Rs 40 crore. Global IME is also coming with a scheme identical to Nabil Balanced Fund while it is not yet clear what kind of scheme NIBL Capital is planning to float—though sources informed that it will also be a closed-end five year plan that comes to the tune of Rs 70 to 80 crore.
In fact many more mutual funds were expected in the market after the government decided to treat mutual funds as a non-taxable entity. And the key stakeholders in the capital market, especially the share market, were upbeat about mutual funds as they give much-needed depth and maturity to the market. Such schemes are one of the safest investment tools for a novice investor, and almost as good as a pension plan for all.
When nobody seems to have an issue with more mutual funds in the market, why is it taking so long for these schemes to materialize?
Though the reasons vary for different companies.
Officials with NMB, NIBL and Laxmi Capital cite new regulations enforced by SEBON to seek credit rating for mutual fund schemes for the delay while Global IME said that the process to set up its merchant banker led to the delay.
Global IME official Manoj Gyawali told ShareSansar that they will start the process of seeking the final approval from SEBON as soon as they set up their merchant banker.
Since Global IME did not have its own merchant banking wing, it has recently bought 60 percent stake in Elite Capital so that it can take care of its merchant banking activities, including the launch of its mutual fund scheme.
“Since we did not have our own merchant banker, the process to launch the mutual fund is taking a bit long. Now that we have acquired Elite Capital, we are rebranding it as Global IME Capital and finalizing its logo and other things. We are planning to announce Global IME Capital within a week or two. Then we will immediately apply for the final approval from the SEBON.”
Officials with NMB, Laxmi and NIBL Capital informed that since SEBON has come up with a new regulations making credit rating for mutual fund mandatory for the mutual fund schemes, the process got a bid delayed. All of them said that they were now about to apply for the same with ICRA Nepal.
Given the situation, the investors have to be content with the existing two schemes – SIGS1 and Nabil Balanced Fund -- which for some reasons including lack of awareness about the benefits of mutual funds, remain underpriced in the market.
