Six mutual funds have applied for approval with the Securities Board of Nepal (Sebon) to issue schemes worth Rs6.1 billion. 

Siddhartha Capital, Global IME Capital and Sanima Capital have planned to issue mutual fund schemes worth Rs1.2 billion each, according to Sebon. 

Similarly, CBIL Capital and NIC Asia Capital will be issuing schemes worth Rs1 billion each while NIBL Capital has sought Sebon’s approval to launch a scheme worth Rs500 million. 

Niranjaya Ghimire, deputy spokesperson for Sebon, said the regulatory body was in the process of reviewing the documents of these schemes. 

A mutual fund collects money from many people and invests it in shares, bonds, debentures and other securities. It allows investors with little knowledge to invest their money in the capital market as it is managed by professionals.

Ghimire said there was a growing attraction towards mutual fund in recent days. According to him, investors also invest in the secondary market through mutual funds to minimise risk. 

In the last fiscal year, Sebon allowed four mutual funds to issue 425 million shares worth Rs4.25 billion. Nabil Equity Fund and Laxmi Equity Fund collected Rs1.25 billion while NMB Hybrid Fund L-1 and NIBL Pragati Fund collected Rs1 billion and Rs750 million respectively. 

Currently, eight mutual funds established as subsidiaries of commercial banks are in operation. They are NIBL Capital Markets, Laxmi Capital Market, Global IME Capital, Siddhartha Capital, NMB Capital, Nabil Investment Banking, CBIL Capital and Prabhu Capital. These companies have collected funds totalling Rs9.75 billion. 

Sebon has recently granted mutual fund operating licences to Sanima Bank and NIC Asia Bank. Ghimire said Civil Bank was also in the process of obtaining a licence for its mutual fund. 

As of mid-May, mutual funds had a total investment value of Rs6.23 billion in equities. Their largest investment valued at Rs1.91 billion is in commercial banks.

Investments in insurance companies and microfinance companies make up 24.96 percent and 14.45 percent respectively.