KATHMANDU, July 25: Most of the mutual fund schemes listed on Nepal Stock Exchange (Nepse) are currently trading below their face value.
Out of 13 mutual fund schemes that are listed on the secondary market, per unit price of nine mutual fund schemes have slid below their par value of Rs 10. Only four schemes are trading above the price that unit-holders bought from the primary market.
Mutual fund is an investment vehicle that pools money from many investors and invests the money in stocks, bonds, short-term money-market instruments, other securities or assets, or some combination of these investments. The combined holdings that the mutual fund own are known as portfolio. Each share represents an investor's proportionate ownership of the fund's holdings and the income that those holdings generate. Mutual fund schemes are considered to be relatively safer investment instrument for those investors who have less appetite for risk.
After the allotment of the issuance of schemes, they are listed on the stock market to provide liquidity to investors. As the demand for the units of mutual funds has declined, their prices are also on a downward trend.
Only Laxmi Value Fund-1, NIBL Samriddhi Fund-1, NMB Sulav Investment Fund-1 and Siddhartha Equity Oriented Scheme are currently trading in the market above their face-value as of Tuesday.
The slump of the mutual fund schemes below their par value follows the bearish trend seen in the stock market. The fall in the price of mutual fund schemes in the secondary market spells a paper loss to unit-holders who have bought mutual funds from the primary market.
However, fund managers say that per unit price of any scheme should be compared with their net asset value of the schemes to understand the performance of the mutual fund.
Meanwhile, two mutual fund schemes worth Rs 1.7 billion are in the pipeline. According to Securities Board of Nepal (Sebon), Global IME Capital Ltd and NIBL Capital Ltd have applied for the approval of the capital market regulator to issue mutual fund schemes worth Rs 1.7 billion.
As a fund manager of 'Global IME Balance Fund-I', Global IME Capital Ltd has sought the approval to float mutual fund worth Rs 1.2 billion. Similarly, NIBL Capital Ltd is planning to issue 50 million units under its scheme 'NIBL Sahabhagita Fund' worth Rs 500 million.