What is Investment/Merchant Bank?

An Investment/Merchant Bank is the financial institution that assists institutions to raise capital through initial public offer, right issue. Investment Bank helps clients (individual/corporate houses) in buying and selling securities, gives financial advisory services, assists in merger & acquisition, loan syndication etc.

How does an investment bank differ from other commercial banks?

Commercial Bank is the financial institution that accepts deposit and advance loans to individuals/corporate houses etc. whereas Investment Bank is the financial institution that assists institutions to raise capital through initial public offer, right issue. Investment Bank helps clients (individual/corporate houses) in buying and selling securities, gives financial advisory services, assists in merger & acquisition, loan syndication etc.

What is Initial Public Offering?

Initial Public Offering, in general termed as IPO, is the first time offer of company’s stock to the general public. Through this process a private limited company transforms into public limited company.

What is Further Public Offering (FPO)?

Further Public Offering (FPO) is the issuance of stock by a public company which has already issued IPO and has been listed in Stock Exchange. 

What is the difference between IPO and Mutual Fund?

IPO is the first time offering of company stock to general public whereas mutual fund is an investment vehicle that collects a pool of fund from group of investors and invest in a diversified list of securities.

Can I invest in IPO?

Any individual/ institution who have interest in stock market and are able to and willing to pay the cost, can invest in IPO after the fulfillment of all requirements such as having your DEMAT account, Bank account, citizenship copy, PAN number etc.

What amount do I have to put to invest in IPO?

The minimum number of shares an individual can apply differs from company to company. The information regarding the same can be viewed in the prospectus of the company.

What is Mutual Fund?

Mutual fund is a professionally managed investment vehicle that brings together pool of funds collected from many investors with purpose of investing in securities such as stocks, bonds, debentures etc.

How Mutual Fund operates?

What are the different types of mutual fund?

Mutual fund can be classified on various overheads. On the basis of their maturity, Mutual Funds are of type: Close End Fund and Open End Fund
Close End Fund: Close end fund are those mutual funds which have fixed maturity period, that means at the date of maturity the fund is liquidated.
Open End Fund: Open end fund are those mutual funds which don’t have maturity period. 

What is the Net Asset Value of the scheme?

In simple words, Net Asset Value (NAV) is the market value of the securities of a scheme divided by numbers of units outstanding of the scheme on any particular day. As the market value of securities changes every day, NAV of a scheme also changes every day.

What is Assets Management Company (AMC)?

Assets Management Company is an investment management company that collects a pool of fund from many investors and invests in the securities.

How can I invest in mutual fund?

One can invest in mutual fund in two ways: Firstly, you can apply for desired units of mutual fund during its initial public offering. Secondly, you can invest in mutual funds by purchasing its units from secondary market in case of close end Mutual Fund. And in case of Open end fund, you can purchase its units from the AMC itself.

Do mutual fund pay dividend to investor?

Yes.

When does Mutual fund pay dividend?

As any other company, Mutual fund too declare dividend at the end of fiscal year.

Can I trade units of Mutual Fund in the secondary market?

All Close end mutual funds are listed in Stock Exchange for trading. You can trade their units in Stock Exchange at prevailing market price. Open End Mutual Funds are not listed for trading in secondary market, but you can buy/sell their units to the AMC.

What happens when Close End Fund matures?

As mutual funds arrive close to its maturity date, they begin to sell their asset (stocks, bonds, debenture etc.). The total cash collected after selling all their assets is distributed among unit holders according to their unit holdings.

What do you mean by units of Mutual Fund?

As a company raises capital from public by issuing shares, Mutual Funds raise fund from public by issuing units. While shares are issues at face value NPR 100, mutual funds units are issued with face value NPR 10.

Are investments in mutual fund safer?

Investment in mutual fund scheme is comparatively safer than investment in the stock market. Mutual funds are diversified investment tool which invests in a pool of different securities.

What is Portfolio Management Services (PMS)?

Portfolio Management Services (PMS) is a type of service offered by investment banks to their clients (can be individuals and institutions). It is an investment portfolio in stocks, fixed income, cash and products such as bonds, managed by a professional money manager, and can potentially be customized to suit specific investment objectives of clients. Clients have the freedom and the flexibility to tailor their portfolio as per their investment philosophy and financial goals.

Who can be PMS investor?

This specialized investment solution provided by Portfolio Management Services cater to both individuals and institutional entities who might require a dedicated investment management service. PMS investors typically look for:
• Investment opportunities in asset classes like equity, fixed income, bonds, etc.
• A highly personalized investment management solution and tailored client service.
• Investment advice for long-term wealth creation.

What is the difference between PMS and Mutual Funds?

• PMS offers exclusive and unique portfolios as per requirement.
• Scope to customize and personalize portfolios based on the specific objectives and needs of the investor
• Securities bought under PMS are owned by the individual clients.
• PMS has the flexibility to be fully or partially invested in stocks and cash.
• Minimum entry size of NPR 300,000 makes it an exclusive investment management.
• Investment decisions are handled by portfolio manager for the investors under PMS.
• Regular interaction with the investment team.

Is PMS governed by any regulatory body?

Yes, Portfolio Management Services is supervised by the Securities Board of Nepal (SEBON).

How are investments made in PMS?

A minimum amount of NPR 300,000 can be invested in the following ways:
• By investing in cash.
• By transferring their existing portfolio.
• By combining cash and portfolio.

Who can invest through PMS?

• Nepalese nationals
• Non Residential Nepalese after complying with regulatory obligations.

What are different types of PMS?

• Discretionary: Choice, timing and execution of the investment decisions rest with the Portfolio Manager.
• Non Discretionary: Portfolio manager suggests the investment ideas. Choice and the timing of the investment decisions rest with the investor. However the execution of trade is done by the portfolio manager.

How can one start PMS?

• PMS provider and investor will have to sign an agreement.
• PMS provider facilitates the opening of demat and cash accounts for the investor.
• Once the accounts are opened, client can
  a) issue a cheque for his investment
  b) transfer securities from his existing demat account to the new demat account
  c) Combination of cash transfer and securities transfer.

What are benefits of PMS?

• Professional Management
• Continuous Monitoring
• Hassle Free Operation
• Flexibility
• Transparency
• Customized Advise.