What is a mutual fund? Mutual funds in Nepal, every fund and how to buy

A mutual fund (म्युचुअल फण्ड, सामूहिक लगानी कोष) is money from many people put into one pool, which a licensed company invests for them in shares, bonds and bank deposits. Each person owns units (इकाई) of the pool in proportion to what they put in, and each unit is worth its share of everything the pool owns. In Nepal every unit is first sold at Rs 10.

An example. 10,000 people put in Rs 10,000 each. The pool has Rs 10 crore, split into 1,00,00,000 units of Rs 10. The manager buys shares of fifty companies, some bonds, and keeps some cash. If a year later all of it is worth Rs 11 crore, each unit is worth Rs 11 and each person's 1,000 units Rs 11,000. If it is worth Rs 9 crore, each unit is worth Rs 9. Nobody promises either.

So a mutual fund is not a bank account and has no interest rate, though "mutual fund interest rate in Nepal" is searched every month. It is a way to own a small slice of many investments at once, chosen and watched by a professional, from Rs 1,000. The drawing uses a real fund's real rupees.

Five parties stand between your money and the shares it buys, and the rules keep them apart on purpose. Siddhartha Equity Fund's report names two at the foot of its page: Siddhartha Bank as sponsor (कोष प्रवर्द्धक), the bank that set it up, and Siddhartha Capital as fund manager (योजना व्यवस्थापक), the company that chooses what it buys.

The depository holds the fund's shares and cash and keeps the register of unit holders; with SEBON's approval the manager can be its own depository, and most are. The fund supervisors watch both for unit holders and can order the manager to stop an irregular act.

• The bank's name is on the fund, but the money is not the bank's. A fund may not buy securities issued by its sponsor or its depository, and its money may not be lent out or used for the manager's own costs.
• Separate books. Each scheme keeps its own accounts and is audited by a different chartered accountant from the manager's.

On 3 Nov 2026 Nepal had 61 mutual fund schemes: 14 open-ended and 47 closed-ended. 45 of the closed-ended funds trade on NEPSE; the other 2, NIC Asia Equity Opportunity Fund and Muktinath Mutual Fund 2, were allotted in October 2026 and wait to be listed. The closed-ended funds' registered sizes add up to about Rs 5,751 crore; the open-ended funds held about Rs 3,119 crore by ShareSansar's October figures.

Two funds matured in July and August 2026: Citizens Mutual Fund 2 on Ashad 21, 2083 and NMB 50 on Bhadra 12, 2083. Pages that say "43 funds, 36 closed and 7 open" are counting a market that has since grown by 42%.

More are coming. By Kartik 11, 2083 SEBON had approved 4 new closed-ended schemes for 2083/84 (Muktinath Mutual Fund 2, NIC Asia Equity Opportunity Fund, Citizens Super 50 and Nabil Growth Fund) and let NIBL Sahabhagita and Shubha Laxmi Kosh sell more units. 8 more wait in its pipeline, 3 of them open-ended: NMB Flexi Cap Fund, Global IME Capital's Global Systematic Investment Product and Himalayan Capital's Himalayan Dirghakalin Bachat Yojana.

An open-ended fund (खुलामुखी) has no fixed size and no end date. It sells new units to anyone on any working day at that day's NAV and buys them back the same way, so the number of units grows and shrinks. Its units are not listed on NEPSE. It is the only kind a SIP can buy.

A closed-ended fund (बन्दमुखी) sells a fixed number of units once, in an IPO, and then lists them on NEPSE, where you buy from and sell to other investors through a broker at whatever price the market sets. It runs for a fixed term, 7 to 12 years for the funds listed now (35 of 47 for ten), then sells everything and pays out.

It owns

Rs 163.50 crore

It owes

Rs 1.80 crore

Units

15 crore

NAV

Rs 10.78

NAV (net asset value, खुद सम्पत्ति मूल्य) is what one unit is worth: everything the fund owns at market prices, less everything it owes, divided by the number of units. Here it is from Siddhartha Equity Fund's own statement for the end of Ashwin 2083, a closed-ended fund of 15 crore units. Every line is the report's; only the sums are ours, and they match its totals.

The same report lists every holding. Siddhartha Equity Fund had 46 listed holdings in 9 groups, a little in bonds, and 30% of its money as cash in the bank. Its largest holding, Everest Bank, was 7.9% of the fund; the rule is at most 10% in one company's securities.

• Spread, by rule. At most 10% of NAV in one company's securities and 10% of any company's paid-up capital; at least 20% of the fund in ordinary shares; at most 15% in bank fixed deposits; at most 10% in another fund.
• It owns other funds too, valued at their NEPSE price: NIC Asia Growth Fund 2 at Rs 8.84 a unit, against its own NAV of Rs 10.03; NIBL Stable Fund at Rs 8.51 a unit, against its own NAV of Rs 9.58.
• Cash is a choice. Nearly a third in the bank, a year before the fund ends; the report does not say why. A fund with a lot of cash rises less when shares rise and falls less when they fall.
• Equity, balanced and debt funds differ mostly in this split: an equity fund holds mainly shares; a debt fund mainly bonds and deposits, and moves less.

People search for the mutual fund with the highest NAV in Nepal. At the end of Ashwin 2083 it was Prabhu Smart Fund, at Rs 13.43; the lowest was HLI Large Cap Fund, at Rs 8.63. 37 of the 47 closed-ended funds were above Rs 10. Neither number says which fund will do better from here.

• A payout lowers the NAV by the same amount. When a fund pays Rs 1 a unit, its NAV drops by Rs 1 that day: the money left the fund and went to you. A fund that pays out generously can show a lower NAV than one that pays nothing. NIBL Sahabhagita Fund paid Rs 7.65 a unit in cash between 2020 and 2025, and its NAV was Rs 10.48 on 2 Nov 2026.
• Start dates differ. A fund that began in a low market bought cheap shares; one that began near NEPSE's 2021 record did not. Compare funds over the same dates.
• NAV below Rs 10 is a loss so far, not a bargain, unless payouts made up the difference.
• For a closed-ended fund, the NAV is not what you pay. The NEPSE price is, and it is usually lower.

On NEPSE a closed-ended unit sells for what buyers will pay, which is rarely its NAV. When the price is below the NAV the unit trades at a discount; above it, at a premium. On 3 Nov 2026, 44 of the 45 trading funds were below their Ashwin-end NAV, by 7.7% on average (the middle fund 8.5%), and up to 11.2% for NIC Asia Growth Fund 2. Only Himalayan 80-20 was above, at +2.5%. 38 of them sold for less than Rs 10.

Siddhartha Equity Fund is the clearest case: NAV Rs 10.78, price Rs 9.90, −8.2%. On NEPSE Rs 9.90 bought Rs 10.78 of shares, bonds and cash, about a year before the fund pays out its NAV.

• Few buyers. Fund units trade thinly. Nabil Balanced Fund-2 averaged 23,753 units a day over 30 days, about Rs 2,18,000; selling a large holding moves the price.
• Costs come out every year, about 1.8% of NAV in Siddhartha Equity Fund, and buyers allow for them.
• The gap closes for certain only at maturity, when the fund pays its NAV in cash. The chart shows no sign of it closing earlier: funds a year or two from the end traded about as far below NAV as funds ten years away.
• The NAV counts shares at today's price, which may fall before the fund sells them.

All 47, the soonest to mature first. Size is the registered size (units × Rs 10); the NAV is from each manager's report for the end of Ashwin 2083 and the price NEPSE's last trade on 3 Nov 2026, both as ShareHub lists them. A fund with no price was allotted in October 2026 and is not yet trading.

The open-ended funds are the ones a SIP buys. Their NAVs move daily and they never mature. How to choose, pay and redeem, every fund's payouts and three real SIPs are in SIP in Nepal; here they are beside the closed-ended list, biggest first.

A closed-ended fund's end date is fixed when SEBON approves it, and its monthly report prints it under the name: Siddhartha Equity Fund's reads "योजना समाप्त हुने मिति 2084/07/23", 8 Nov 2027. At least a month before that day the manager must ask NEPSE to delist the units, so trading stops early. After maturity it sells everything and must pay unit holders in proportion to their units within 3 months, which SEBON can stretch by 3 more.

What each unit receives is the refund NAV: the value per unit once everything is sold, above or below Rs 10. Of 14 funds that had matured by May 2026, Siddhartha Investment Growth Scheme-1 refunded Rs 21.77 a unit and NIBL Pragati Fund Rs 9.58, less than its IPO price.

• You need do nothing to be paid, if the bank account linked to your demat is current. The money is sent there.
• Units must be in your demat account, and pledged units are paid only once the lender releases them.
• Selling before the end gets the NEPSE price, usually below NAV. Holding to the end gets the refund NAV, whatever it turns out to be.

New closed-ended funds are sold like any IPO: in MeroShare, under My ASBA, at Rs 10 a unit. The latest, Muktinath Mutual Fund 2, offered 10 crore units: 1,30,00,000 to its sponsor Muktinath Bikas Bank and 20,00,000 to its manager Muktinath Capital (15% of seed money between them), and 8,50,00,000 to the public and institutions. You could apply for 100 to 1,00,00,000 units. It opened on Ashwin 1, 2083 and closed early on Ashwin 8 (24 September 2026), with 1,45,968 applicants asking for 10,66,51,880 units, 1.25 times the public's share.

A company IPO that is oversubscribed gives 10 shares by lottery. Fund issues have instead often grown by 25% when demand ran high: SEBON registered Muktinath's at 12.5 crore units; Garima Samriddhi Yojana grew the same way in 2025 after 94,681 people asked for 12,18,78,510 units, and its manager said every valid applicant received units. How units are shared when demand exceeds even that is set in each issue's notice.

1. 1Have the accounts ready: a bank account, a demat account (BOID) and MeroShare with your CRN, as in how to open a demat account.
2. 2Watch for the issue in MeroShare's Current Issue list, where fund issues sit beside company IPOs, and read its notice for the minimum, the maximum and the dates.
3. 3Apply with your bank, units (from 100), CRN and PIN, exactly as for a share IPO: how to apply for an IPO in MeroShare.
4. 4Check the allotment after the issue closes; units arrive in your demat and become tradable when NEPSE lists the fund, weeks later: Siddhartha Equity Fund 2 was allotted on 18 June 2026 and listed on 4 August.
5. 5Or buy on NEPSE at any time, through your broker's TMS, like a share: you pay the market price plus commission, the SEBON fee and the DP charge, and the units arrive under T+2. Selling works as in how to sell shares in Nepal.

1. 1A demat account and a bank account in your own name; the units are credited to the demat.
2. 2The fund manager's portal or office. Each manager runs its own; the list of portals is in SIP in Nepal. No broker is involved, and the fund is not on NEPSE.
3. 3A lump sum or a SIP, usually from Rs 1,000, at the NAV of the day your money reaches the fund, after the Rs 5 transfer charge; the units show in MeroShare within days.
4. 4To sell, redeem on the portal on any working day: you get that day's NAV less any exit fee (at most 1.5%, usually only in the first one or two years), paid to your bank.

A fund's costs come out of the fund, not your pocket, so you never see a bill: they show up as a slightly lower NAV. Everything a fund charges in a year, as a share of the fund, is its expense ratio. The regulation caps the three main fees, each a year of net asset value: the fund manager at most 1.5%, the depository 0.2% and the supervisors 0.2%. Buying carries no fee; an open-ended fund may charge an exit fee of at most 1.5% on what you sell back, which goes into the fund.

Siddhartha Equity Fund's report shows them at work. In the three months from 1 Shrawan it paid Rs 68,33,899 to its manager and depository and Rs 73,53,237 in all. Over a year that is about 1.69% of its net assets to the manager and depository, the two caps together, and about 1.82% in all.

• Open-ended funds' expense ratios ran from 1.61% (NIBLSF) to 3.04% (CSBY) in October 2026, as NepseAlpha lists them.
• What the gap takes: Rs 1,00,000 for 10 years in funds that each earn an illustrative 10% before costs becomes Rs 2,23,817 at 1.61% a year and Rs 1,95,981 at 3.04%: Rs 27,836 apart.

Funds pass on what they earn as distributions, usually called dividends, declared as a percentage of the Rs 10 unit. A 10% distribution is Rs 1 a unit: Rs 1,000 on 1,000 units, of which the fund keeps back 5% tax, final, and pays Rs 950. The NAV falls by the same Rs 1 a unit that day.

Closed-ended funds pay like companies: the manager proposes, the fund holds a book closure, and you must hold the units on the last trading day before it, as in book closure, AGM and auction shares. In August 2026 NMB Sulav Investment Fund-II proposed 10%, NMB Hybrid Fund L-II proposed 4.5% and NMB 50 proposed 3.15% in cash. Open-ended funds pay to the bank account linked to your demat, or in new units if you chose that.

The figure that circulates, "matured funds paid 17.12% a year", is ShareSansar's average of 14 matured funds' dividends divided by their years, as a percentage of the Rs 10 unit. It is not a return on the price you would have paid, it is not compounded, and it leaves out what each fund refunded at the end (NIBL Pragati Fund, Rs 9.58).

A fund's own income is not taxed, and every distribution to an individual has 5% kept back by the fund as a final tax. What you pay on a gain when you sell is less clear, and managers' own pages still show the rates from before July 2026: NIC Asia Capital's said 5% and 7.5% when we read it on 4 November 2026.

Fixed deposit

Rs 1.48 lakh

SSIS, open-ended

Rs 1.23 lakh

NIBL Sahabhagita

Rs 0.97 lakh

NEPSE index

Rs 0.93 lakh

Rs 1,00,000 put into each in July 2021 and left until 1 Nov 2026, at real prices: a deposit renewed each July at NRB's average rate, after the 6% tax; Siddhartha Systematic Investment Scheme (SSIS) from its first NAV of Rs 10.00; NIBL Sahabhagita from Rs 17.45 on 15 Jul 2021, payouts taken in cash after tax; and the NEPSE index from 2,883 to 2,690.15, prices only.

A year, that is 7.6% for the deposit, 4% and −0.5% for the two funds, and −1.3% for the index. To keep up with prices at NRB's five-year average inflation, Rs 1,00,000 needed to become Rs 1.32 lakh.

Over these years the deposit won, because July 2021 was a month before NEPSE's record of 3,198.60 on 18 Aug 2021, and deposits paid up to 10% in 2022 and 2023. Over the two years before, from mid-July 2019 to mid-July 2021, the index rose 129%. One window proves nothing either way; the SIP guide runs the index from four different months.

Two questions hide in this one. Safe from theft? Mostly: the structure keeps the manager's hands off the money, the units are in your own demat account, and we found no case of a licensed Nepali fund losing unit holders' money to fraud. Safe from loss? No. A mutual fund is regulated, not guaranteed.

Every fund must publish a report within 15 days of each month's end, on its manager's website and in a national daily; Siddhartha Capital put its Ashwin 2083 one online on 30 Oct 2026. Seven things to read, in this order, with that report's numbers.

1. 1The NAV, this month and last: Rs 10.49 to Rs 10.78, +2.8%.
2. 2Where the money is: 69.7% invested, 30% in the bank. More cash means smaller swings either way.
3. 3Cost against value: the holdings cost Rs 107.64 crore and were worth Rs 112.67 crore, a gain of Rs 5.03 crore not yet taken.
4. 4Realised and unrealised income: of Rs 7.08 crore earned since 1 Shrawan, Rs 6.17 crore (87%) is unrealised: a rise in the price of shares still held, which a fall can take back.
5. 5Expenses: Rs 73.53 lakh in three months, 1.82% a year; compare it with the caps.
6. 6The holdings: the biggest (Everest Bank, 7.9%), the sectors, and any other funds it owns.
7. 7The price: for a closed-ended fund, set the NAV beside the NEPSE price: Rs 10.78 against Rs 9.90.

No fund is best for everyone, and the one with the best record so far may not have the best next five years. This page names none. These are the things worth comparing, and where each is published.

• What it holds against how long you will stay. Equity funds for five years or more; debt funds for less movement. The monthly report shows the split.
• The yearly cost. The expense ratio, from the report's expenses or NepseAlpha's list.
• Return including payouts, over the same dates. NAV change plus every payout, for funds that started at about the same time.
• For a closed-ended fund: the discount and the years left. A wide discount with years to run is not the same as one with months to run.
• Size and trading. A very small or thinly traded fund is harder to sell.
• The manager's other funds, and how they behaved in the 2021–22 fall.
• The terms: exit fees and any lock-in on an open-ended fund; the maturity date on a closed-ended one.

1. 1Keep three to six months of spending in the bank first, so a fall never forces you to sell.
2. 2Decide the kind: open-ended for buying a little at a time and selling back any day; closed-ended for buying on NEPSE, or in an IPO, and holding to a fixed date.
3. 3Read one fund's latest monthly report with the seven steps above, before putting in a rupee.
4. 4Start small, and look once a quarter, not once a day.