Nabil to launch Rs 600m mutual fund today

KATHMANDU, March 20: Nabil Invest, the investment arm of Nabil Bank, is launching a mutual fund called ´Nabil Balanced Fund I´ on Wednesday. The scheme worth Rs 600 million will expire after five years.



Under the scheme, the company is floating 60 million units of securities worth Rs 10 each. “We can raise the issue amount to up to Rs 750 million in case of surge in demand,” Pravin Parajuli, the CEO of Nabil Invest, told a press conference held in Kathmandu on Tuesday.[break]



The mutual fund entertains investment of as little as Rs 1,000 and up to Rs 60 million. The scheme will be floated on the market till April 3 but can be closed as early as March 24 in case of over-subscription, Parajuli said. It will later be listed on Nepal Stock Exchange (Nepse) and can be traded like any other securities on the stock market.



“The objective of the scheme is to balance the risk of the portfolio by investing in a mix of securities comprising of equity, equity related instruments and fixed income instruments as allowed by prevailing rules and regulations for regular returns to unit holders,” said Parajuli.



The Securities Board of Nepal, the securities market regulator, allows mutual funds to invest money raised from public in stocks, shares floated through IPO, treasury bills and bonds issued by Nepal Rastra Bank, government-guarantee bonds, bank deposits and money market instruments, among others.



Among these tools, Nabil Invest plans to invest at least 35 percent of the amount raised from the public in fixed income securities.



With these investments, Nabil Invest, which currently manages a portfolio of around Rs 570 million, plans to give away 12 percent return in the first year of investment, 17 percent in the second year, 18 in the third year, 21 percent in the fourth and 20 percent in the fifth and final year.



“On average, expected yield is around 18 percent per annum,” Parajuli said.



However, investors should be careful about putting money in mutual funds as unlike investment in government bonds and debentures, a fixed return is not guaranteed in such schemes. This means whatever profit made by mutual funds will be distributed equally among investors, and in case of losses, investors should be ready to bear those equally as well.



“We hope the scheme will emerge as a helpful investment tool for small investors who do not have much expertise on investment in various markets,” Nabil Bank CEO Anil Gyawali told the press conference.

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