What is Mutual Fund in context of Nepal

A mutual fund in Nepal is a financial entity that aggregates money from investors and invests it in a diversified portfolio. This enables individual investors to benefit from professional management and reduced risk. Instead of making independent investment decisions, investors pool their funds, which are then allocated across various securities by experienced fund managers.

The primary objective of mutual funds in Nepal is to provide structured and professionally managed investment opportunities, offering better returns and reduced risks compared to individual investments.
 

Types of Mutual Fund in Nepal

• Open Ended Mutual Fund

Open-ended mutual funds allow investors to buy or sell units at any time based on the prevailing NAV. They do not have a fixed number of units, providing greater liquidity and flexibility. 

• Close Ended Mutual Fund

Closed-ended mutual funds issue a limited number of units, which are traded on the stock exchange. Investors cannot redeem units directly from the fund but must trade them in the market, often at prices that may differ from the NAV.

Benefits of buying Mutual Fund in Nepal

Here are the key benefits of buying mutual funds in Nepal:

Diversification: Mutual funds reduce risk by investing in a variety of stocks, bonds, and other securities. Poor performance in one asset is balanced by gains in others, providing a safer investment option.

Professional Management: Funds are managed by experienced professionals who conduct in-depth market research and make informed decisions to maximize returns and minimize risks. Investors don’t need prior knowledge of markets or stocks.

Affordability: With a low minimum investment requirement, typically starting at NPR 1,000, mutual funds are accessible to individuals with limited budgets.
 

FAQs

How do I buy Mutual Fund Units in Nepal

You can purchase open ended mutual fund units through licensed fund managers, either via their online platforms, mobile apps, or by visiting their offices directly. In the case of closed-ended fund, you can only buy it through licensed brokers in NEPSE.

How are Mutual Fund regulated in Nepal

Mutual funds in Nepal are regulated by SEBON, which sets rules and guidelines to ensure transparency, proper management, and investor protection.

Who manages the mutual fund in Nepal?

Mutual funds are managed by licensed professionals or institutions, often subsidiaries of commercial banks, who make investment decisions on behalf of investors.

Can I invest 1000 Rs in a mutual fund?

Yes, mutual funds in Nepal allow investments starting as low as NPR 1,000, making them accessible to a wide range of investors