A mutual fund is a collection of money from several individuals that is used to invest in a variety of securities, including stocks, bonds, money market instruments, and other types of investments. Professional fund managers handle these investments and generate profits for the investors on their behalf.
A mutual fund gives investors access to full-time, qualified money managers who are qualified to actively buy, sell, and monitor investments. These managers have the knowledge, resources, and expertise to do so.
You may easily diversify your investments by purchasing shares in a mutual fund, which is another way of stating that you won’t put all of your chickens in one bucket. If the value of one investment falls, the value of another investment in the portfolio can rise.
There’s never a perfect time to invest in stocks or the stock market, but there is a right time and a wrong time! THE GREATEST FEAR OF A PROFESSIONAL INVESTOR, WHO MANAGES MONEY FOR A LIVING, IS CAPITAL WITHDRAWALS AT THE WRONG TIME.
Many consumers would find it more expensive to buy all of the individual stocks owned by a single mutual fund directly. In contrast, most mutual funds have lower initial minimum investments.
Also Read: Check Online IPO Results in Nepal
Types of Mutual Funds around the World
There are different types of mutual funds around the world, some of them are:
- Equity Funds: Invest in stocks of companies, providing an opportunity for capital appreciation.
- Fixed Income Funds: Invest in debt securities, such as bonds, with the objective of generating income.
- Balanced Funds: Invest in a mix of equity and fixed-income securities to provide a balance of capital appreciation and income.
- Index Funds: Track the performance of a specific index, such as the S&P 500, and invest in the same securities as the index.
- Sector Funds: Invest in specific sectors, such as technology or healthcare, to provide exposure to a particular industry.
- International Funds: Invest in securities outside of the investor’s home country, providing diversification and exposure to global markets.
- Specialty Funds: Invest in a specific asset class or investment strategy, such as real estate or socially responsible investing.
Before making an investment, it's critical to complete your homework and understanding the investment strategy, risks, and costs related to each form of mutual fund. When choosing a mutual fund, you should also take your investing objectives, risk tolerance, and time scale into mind.
Types of Mutual Funds in Nepal
- Equity Funds: These funds invest in the stocks of businesses that are listed on the Nepal Stock Exchange, offering the chance for capital growth.
- Fixed Income Funds: With the aim of producing income, these funds invest in debt instruments such as corporate bonds issued by firms doing business in Nepal or bonds issued by the government of Nepal.
- Balanced Funds: To provide a balance of income and capital growth, these funds invest in a variety of equities and fixed-income assets.
- Index Funds: These funds invest in the same assets as the index and follow the performance of a particular index, such as the Nepal Stock Exchange (NEPSE) index.
- Fund of Funds: These funds diversify across many asset classes by investing in other mutual funds rather than specific equities.
What is Open Ended and Close-Ended Mutual Funds?
Open-Ended Mutual Funds: A kind of investment scheme that does not have a fixed number of ordinary shares is an open-ended mutual fund. The fund, on the other hand, always distributes new shares to investors and redeems existing shares on demand. As a result, investors can purchase or sell fund shares at any moment, and the fund manager will buy back or issue additional shares as necessary.
Closed-end Mutual Funds: A closed-end fund is a form of mutual fund that, in order to obtain money for its initial investments, issues a predetermined number of shares through a single initial public offering (IPO). After then, its shares can be purchased and sold on the stock market, but no new shares or funds will be generated for the fund.
Registered Mutual Funds in Nepal
|Type of Mutual Fund
|CITIZENS MUTUAL FUND 1
|CITIZENS MUTUAL FUND 2
|GLOBAL IME BALANCE FUND -1
|GLOBAL IME SAMMUNAT YOJANA -1
|KUMARI DHANABRIDDHI YOJANA
|KUMARI EQUITY FUND
|LAXMI EQUITY FUND
|LAXMI UNNATI KOSH
|LAXMI VALUE FUND-1
|MEGA MUTUAL FUND – 1
|NABIL BALANCE FUND – 3
|NABIL BALANCED FUND-2
|NABIL EQUITY FUND
|NIBL PRAGATI FUND
|NIBL SAHABHAGITA FUND
|NIBL SAMRIDDHI FUND 2
|NIBL SAMRIDDHI FUND-1
|NIC ASIA BALANCED FUND
|NIC ASIA DYNAMIC DEBT FUND
|NIC ASIA FLEXI CAP FUND
|NIC ASIA GROWTH FUND
|NIC ASIA SELECT-30
|NIFRA URJA DEBENTURE, 7% – 2085/086
|NMB HYBRID FUND L- 1
|NMB SARAL BACHAT FUND-E
|NMB SULAV INVESTMENT FUND – II
|NMB SULAV INVESTMENT FUND I
|PRABHU SELECT FUND
|RBB MUTUAL FUND- 1
|SANIMA EQUITY FUND
|SANIMA GROWTH FUND
|SANIMA LARGE CAP FUND
|SHUBHA LAXMI KOSH
|SIDDHARTHA EQUITY FUND
|SIDDHARTHA EQUITY ORIENTED SCHEME
|SIDDHARTHA INVESTMENT GROWTH SCHEME-2
|SIDDHARTHA SYSTEMATIC INVESTMENT SCHEME
|SUNRISE BLUECHIP FUND
|SUNRISE FIRST MUTUAL FUND