Mutual funds in Nepal have increased their investments in the share market. By the end of Jestha (mid-June), the total investment through both open-ended and closed-ended mutual fund schemes reached NPR 48.37 billion. This is an increase of NPR 2.46 billion compared to the Chaitra end (mid-April), when the total investment stood at NPR 45.91 billion.
Mutual Funds Hold 72% of Assets in Stocks
Out of the total mutual fund assets, 72% has been invested in the stock market. By the end of Jestha, the total fund size grew to NPR 63.72 billion, up by 6.75% from NPR 59.69 billion at the end of Chaitra.
In addition to sharing investments, mutual funds have also placed:
- NPR 4.93 billion in fixed deposits
- NPR 10.42 billion in cash holdings
Funds are allowed to invest a maximum of 15% of their assets in fixed deposits.
Companies Preferred by Mutual Funds for Investment Based on Number of Shares
More Funds, More Investment
The rise in both asset size and investments is due to the launch of new mutual fund schemes. As of Jestha-end:
- 38 closed-ended funds
- 8 open-ended funds
They are currently operating in the market.
Investment Strategy of Mutual Funds
According to Dipesh Vaidya, CEO of NMB Capital, mutual funds aim to invest in companies that give better returns. The strategy includes:
- Holding cash for daily trading
- Buying technically strong stocks for short-term trading
- Holding fundamentally strong stocks for long-term growth
To support this, mutual funds have research teams that study companies using various indicators. Based on these studies, the management team selects stocks for investment.
Companies with the Highest Mutual Fund Investments (Based on Amount)
Mutual Funds as a Guide for Retail Investors
The stocks selected by mutual funds are visible to the public. Since professional research teams analyze and choose these companies, retail investors can also consider them as potential investment options.
However, investors are advised not to copy mutual funds blindly. The stock prices may go higher than the average purchase price of the fund, making it risky to enter at the wrong time.
What Do Investors Say?
Investor Subash Chandra Dhungana says he uses the mutual fundsā stock picks as part of his investment strategy. He believes:
- It is wise to buy when the stock is below the average purchase price of the fund.
- But buying too high compared to the fund’s entry price can be risky.
Conclusion
The increasing presence of mutual funds in Nepalās stock market shows growing confidence and market activity. With strategic investments, professional research, and growing fund sizes, mutual funds are playing a key role in the development of Nepalās capital market. At the same time, retail investors can learn from mutual fund strategies while also managing their own risk carefully.
