Mutual funds market portfolio reaches Rs. 29.7 billion

Kathmandu, Sept 18

Executive Director of the Securities Board of Nepal (SEBON) Niraj Giri said that there has been a paradigm shift in mutual funds (MF) market as the number and size of funds as well as individual investors has gone up significantly.

"Although the size of mutual fund is very small, and it is still in the starting phase, this is satisfactory with Rs. 29.7 billion portfolio," he said while speaking at a programme on 'understanding of mutual funds' organised by Nepalese Association of Financial Journalists (NAFIJ) in cooperation with Merchant Bankers Association of Nepal (MBAN) on Friday.

This development was achieved with a strong collaboration among the stakeholders of the market, including media, he maintained.

However, according to him, Nepali mutual funds market would take some time to attain development and sophistication on par with India and Pakistan. "Investors should be educated about the prospects of the mutual funds as a long-term investment sector," he said.

He also maintained that criticism of mutual fund for not buying shares while the market has gone down is not appropriate since mutual funds mobilise the money from many small investors so they need to be more cautious while buying shares.

President of MBAN Mekh Bahadur Thapa said that mutual fund market in the country has a high potential to grow and the future would be of the open ended mutual funds.

Currently, 26 close ended and 4 open ended mutual funds are in operation in Nepal and 24 are listed in the share market (Nepal Stock Exchange Limited).

Size of close ended mutual fund is Rs. 27.8 billion and that of open ended is Rs. 1.9 billion. Five MFs worth Rs. 3.5 billion are matured.

AGM of NIBL Ace Capital Limited Sachindra Dhungana, said that nine MFs - two open ended and seven close ended - are in pipeline.

Presenting a paper in the programme, he said that mutual funds have opportunities to invest in securities registered in SEBON, securities available for public offering, securities listed in the stock exchange, money market instruments, government bonds, T-bills, debentures and other securities issued by the government, bank deposits and other areas suggested by the SEBON.

"MFs provide benefits like tax, liquidity, simple and easy investment, economies of scale and transparency. Since they are professionally managed and well regulated, small investors can invest their money in them," said Dhungana.

General Secretary of MBAN Paras Mani Dhakal suggested diversifying investment portfolio and managing the risks in the stock market for which the MFs are the best instruments.

He urged the media to impart right information to the investors because share market is a risky market.

Published in The Rising Nepal daily on 19 September 2021.