Mutual Fund NAV in Nepal: Reading the Number, the Fee and the Benchmark

Ask ten people who hold a Nepal mutual fund what its NAV is and most will quote a figure. Ask them which date that figure belongs to, and the room goes quiet. The date is where the useful part of the conversation starts.

What follows is educational. It explains how to read the three numbers that appear on every fund factsheet, and how to check them yourself. It is not investment advice, and nothing here recommends buying or selling any scheme.

The scope is deliberately narrow. Three things only: the NAV, the expense ratio and the benchmark. How instalment plans work, how risk grades get assigned, and which fund suits whom are separate subjects and are not re-explained here.

NAV is a snapshot, not a live price

Net asset value is total assets minus liabilities, divided by the number of units outstanding. Listed holdings get marked at market value, so NAV moves when NEPSE moves. Unlisted holdings are valued on the basis set out in the scheme documents, which is one reason two funds with similar portfolios can report slightly different numbers.

Open-ended schemes create and cancel units at NAV, so the fund manager publishes the figure on a fixed schedule, often weekly and sometimes more often. Closed-end schemes trade on NEPSE instead, where the market price can sit above or below NAV. That gap is a premium or a discount, and it is a separate thing from how the portfolio performed.

Practical rule: never compare two funds' NAVs without checking that both dates land in the same week. A NAV dated Friday set against one dated the previous Monday is not a comparison, it is an accident.

The expense ratio is the fee you never see leave

Every scheme charges an annual expense ratio, and it is deducted inside the fund, which means it is already reflected in the NAV you look at. You do not pay it as a separate bill, and that is exactly why people ignore it.

The ceiling on management fees is set in regulation and restated in each scheme's offer document, so read the document that applies to the fund rather than a number you saw on a blog. Within that ceiling, a higher ratio is a permanent drag on returns.

A hypothetical, purely to show the arithmetic: Rs 10,000 growing at 8% a year before fees reaches about Rs 18,770 after ten years with a 1.5% ratio, and about Rs 17,080 at 2.5%. Roughly Rs 1,690 of difference, from a one percentage point gap nobody advertises. These are illustrative figures for the maths only, not any real scheme's returns.

The benchmark only means something if it matches the mandate

Equity schemes in Nepal commonly measure themselves against the NEPSE index. That is a reasonable yardstick for a portfolio that is mostly listed equity. It is close to meaningless for a scheme holding mostly fixed-income instruments, where a bond or deposit benchmark would be the honest comparison.

Three checks before you take a benchmark comparison seriously. First, is the period identical on both sides? Second, are the fund's returns NAV returns only, or do they include distributions? A scheme that paid out during the year can look weaker than it was. Third, is the benchmark the one named in the scheme document, or one chosen after the fact because it flatters the result?

Beating an index in one year is not a promise about the next one, and no factsheet should be read as if it were.

A low NAV does not mean a cheap fund

New schemes launch at a par value, commonly Rs 10, and older ones may sit well above it. A fund at Rs 10 is not a bargain next to a fund at Rs 30. The unit price tells you nothing about value. What matters is the percentage change over time, the portfolio behind it, and the fee you are paying to hold it.

Fill this in yourself before you compare anything

Copy these columns into a spreadsheet and keep one row per scheme. A blank row is more honest than a row filled from memory.

• Fund and scheme name, plus open-ended or closed-end
• NAV, and the exact date printed beside it
• Expense ratio, and which document you took it from
• Benchmark named in the scheme document
• Fund return and benchmark return, over the same stated period
• Whether returns include distributions
• AUM, with the date it was reported
• Entry and exit terms, if any
• Where you verified each figure (manager's site, offer document, SEBON filing)

Where the numbers actually come from

Start with the fund manager's own NAV page, then cross-check against the scheme's offer document and its periodic reports. SEBON publishes filings and circulars, and the regulations are the source for fee ceilings rather than any summary you find secondhand.

If two sources disagree on the date, assume the older one and ask the manager. A NAV that is a week stale is not wrong, it is just stale, and knowing that changes how much weight you put on it.

None of this tells you which fund to buy. It does mean that when someone quotes a NAV, an expense ratio or a benchmark-beating return at you, you can ask the two questions that deflate most of the noise: as of when, and compared to what.