Professional Documents
Culture Documents
04 Investment Co
04 Investment Co
Kiran Thapa
Option for investing
Deposit in Bank
Loan to friend or relative on interest
Property investments
Investment in Bullion – Gold and silver
Investment in capital markets
Direct: Equity market and debt market
Indirect: Mutual funds
Introduction to Mutual Fund
Mutual fund is a type of financial institution that
money.
of financial assets.
Investment in shares of
investment companies
Fund Investment in
Portfolio of
investment
Cash flow in terms of
dividend or interest
and capital gain/loses Return
Direct investing
Functions
1. Professional management
2. Record keeping and administration
3. Diversification and divisibility
4. Low transaction costs
5. Transparency and Credibility
Structure of Mutual Funds
Fund supervisor:
•A group of minimum five different reputed professionals
with 10 year experience
•Qualification in the area of economics, commerce,
management, corporate law, finance and accounts with
experiences in the areas of commerce and industry,
securities markets, financial sectors, corporate law and
management .
•Fund supervisors are appointed by fund sponsor by
taking approval from the SEBON.
Structure Contd.
By objectives:
Growth/Equity Oriented Scheme (Growth fund)
Income/Debt Oriented Scheme
Balanced Fund
Money Market or Liquid Fund
Sector specific funds/schemes
Open end fund
Varies number of shares
No maturity period (Perpetual)
No fixed capitalization
Redeemable at any time
Traded through company
Trading at NAV per share
Transaction occurs between company and investor
High liquidity than closed end fund
Example : open end fund
Name of scheme: NIBL Sahabhagita fund
Type of scheme: Open ended
Approved size of scheme: NPR 500 million
Seed capital : 15% of NPR 500 = 75 million
New fund offer : NPR 125 million
Par value per unit: Rs 10 per unit
Tradable price : Calculated NAV (daily basis)
Listed: Not listed at exchange
Traded : through co or various distribution
outlets
Contd.
-buy /sell starts from: 3 months of allotment
-fund management fee: 1.25%
Depository fees : 0.4% of applicable NAV
Fund supervisor’s fee : 0.3% of applicable NAV
Entry load: None
Exit load
• Affordability
• Professional management
• Diversification
• Convenience
• Low cost
• Liquidity
• Tax exemption
• Transparency
Disadvantages of mutual funds
- Costs despite negative returns.
- Lack of control.
- Fluctuating returns
History of Mutual Funds
NCM Mutual Fund 2050
Issued by NIDC Capital Market in 1993/94
Open end fund
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Any questions?