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Mutual Funds in Nepal

6:50 AM

Posted By Bhim Chimoriya

Mutual Funds in Nepal

In Nepal, NCM First mutual Fund 2050 was established by NIDC Capital
Market as the first mutual fund in 1993/94. It floated units of Rs10 par

value in the beginning. The fund was of an open end type. The fund

performed well in the beginning, when there was a boom in the stock

market. However, its performance deteriorated in 1995 and its trading

had to be suspended due to excessive selling pressure. The fund was

restructured into a closed end fund to bring it back into operation in the

name of "NCM Mutual Fund, 2059" on August 9, 2002. The previous unit
holders were offered two options - either to refund or to participate in

this new scheme. The fund has 10 million units with Rs10 face value.

Out of the total units, it distributed 1.5 million units to its management

and trustee, 1.33 million to the unit holders of the previous mutual fund

scheme and the remaining 7.17 million units issued to the public.

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Similarly, citizen unit scheme was operate by Citizen Investment Trust as

a second collection investment scheme in 1994/95 . It was incorporated

under the Citizen Investment Trust act, 1990. It was established as an
open ended scheme with the face value of Rs 100 per unit. Citizen

Investment Trust put Rs 5 million as seed capital in the beginning.

NCM Mutual Fund

The "NCM First Mutual Fund, 2050" is the first mutual fund of Nepal,
established in the fiscal year 1993/94. It has terminated by the end of

the fiscal year 200/01. At the time of its termination, the fund had
offered two options to its participants; either to refund or to participate

in another new scheme to be operated and managed by Nepal Industrial

and Development Corporation (NIDC) Capital Markets ltd. in the name of

"NCM Mutual Fund, 2059". SEBO approved this new mutual fund on
August 9, 2002. The fund has 10 million units with Rs 10 face value. Out

of the total units, it distributed 1.5 million units to its management and
trustee, 1.33 million to the unit holders of the previous mutual fund

scheme and the remaining 7.17 million units issued to the public. It has

been regularly reporting SEBO on the performance of the scheme.

Also read: Product Distribution Practices in Nepal

In the fiscal year 2008/09, under the NCM Mutual Fund, total investment

reached to Rs 151.53 million and the net asset value (NAV) reached to

Rs 536.52. In the fiscal year 2007/08, the total investment and the NAV

were Rs 194.778 million and Rs 488.88 respectively. Total number of

unit holders of the fund by the end of the fiscal year 2008/09 was 2951

comprising 2931 individuals and 20 institutions. The per unit market

price of Fund by the end of the fiscal year 2008/09 was Rs 24.0. The

performance trend of the Fund is presented in table 4.3.

Main Features

It is closed end type of fund.

Total unit of fund is 10 millions.

Face value of a unit is Rs 10.

Maturity period of the fund is 10 years.

NIDC Capital Market ltd is the fund manager of the scheme and

Nepal industrial and development corporation and the trustee.

The trustee organization (Nepal industrial and Development

Corporation) and the Fund Manager (NIDC Capital Market) have

invested 15 percent of the total fund as seed money.

The fund is listed in Nepal stock Exchange, hence its price is

determined in the exchange through the interaction of market

forces.

The fund has guaranteed at least 5 percent returns on the face

 value of the units.

Citizen Unit Scheme (CUS)

Under the Citizen Investment Trust, different types of schemes are being

operate: Saving programme, Home loan, Citizen Unit Scheme, Staff

saving policy, Investor Account scheme, Pension Trust and Retired Trust.

SEBO had permitted Citizen investment Trust to operate the citizen unit
scheme in the fiscal year 1994/95. The objective of the scheme is to

collect capital from the small and medium savers to make investment in

a professional and efficient way and distribute the returns earned

thereon. This is an open ended scheme with the face value of Rs 100.00
per unit. CIT itself has been performing the function of selling and

repurchasing the unit of the scheme. It has been regularly reporting

SEBO on the performance of the scheme.

Main features

It is an open ended scheme.

The face value of the scheme is Rs 100 per unit.

The units can be purchased from and sold to CIT at any time.

Therefore, the number of units outstanding changes from time to

time.
This scheme has also guaranteed a minimum return to its

investors.

It is described as a regular income plus growth oriented scheme.

Citizen Investment Trust has taken the responsibility of operation

and management of the scheme. It has constituted a trustee

committee and investment committee for the effective
management of the scheme.

The management fee limited to 1.5 percent of the total fund and
15 percent of the total income.
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About Author: Bhim is a 22 Year old guy and the owner of

wisenepali.com he is blessed with the art of blogging...Read More ...Find
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