In Nepal, Mutual Funds are governed by:

• The Mutual Fund Regulations, 2067(2010 A.D.)
• The Mutual Fund Directive, 2069(2012 A.D.)

Mutual funds raise their funds from the general public and institutions. Each mutual fund investor is a “unit holder” of the mutual fund scheme. All unit holders share in the funds’ gains and losses on an equal basis, proportionately to the amount they’ve invested. Investors are entitled to gains and losses realized on the entire portfolio, not to any individual security the fund is invested in.

In Nepal, Mutual Funds are governed by:

• Closed-End Funds
  • A closed-end fund has a fixed number of shares outstanding and operates for a fixed duration (generally ranging from 3 to 15 years). Close-end funds raise a fixed amount of capital through an initial public offering (IPO). After the funds are raised, the closed-end funds are listed on a stock exchange so its units are traded just like any other stock on an exchange. After the fixed-duration expires, the closed-end mutual fund scheme terminates and investors can redeem their units.
• Open-End Funds
  • An open-end fund is one that is available for subscription all through the year and is not listed on the stock exchanges. Investors have the flexibility to buy or sell any part of their investment at any time at a price linked to the fund’s Net Asset Value (NAV). Open-end funds do not have restrictions on the amount of shares the fund will issue. If demand is high enough, the fund will continue to issue shares no matter how many investors there are. Open-end funds also buy back shares when investors wish to sell.

The corpus or the fund size differs from scheme to scheme. The corpus is fixed in case of closed-end fund. In the present Nepalese context, fund sizes usually range from around Rs.600 million to Rs. 1 billion.