FINANCIAL PERFORMANCE EVALUATION OF MUTUAL FUNDS IN NEPAL

Abstract

The evaluation of financial performance in Nepal's mutual fund industry is crucial for understanding the investment landscape and its contribution to the country's economic growth. This study aims to assess the performance of various mutual funds, including Global IME Samunnat Scheme 1 (GIMES1), NIBL Pragati Fund (NIBLPF), NIBL Samriddhi Fund 1 (NIBSF1), Laxmi Value Fund 1 (LVF1), and Siddhartha Equity Fund (SEF), by analyzing their returns, risk-adjusted performance, and Net Asset Value (NAV). Using established financial models such as the Capital Asset Pricing Model (CAPM), Modern Portfolio Theory (MPT), and the Efficient Market Hypothesis (EMH), the study examines whether these funds deliver value to investors while managing risks effectively. The analysis focuses on key metrics to evaluate mutual fund performance in relation to market benchmarks, such as the Nepal Stock Exchange (NEPSE) index. The study also considers the role of environmental, social, and governance (ESG) factors, given the growing emphasis on sustainable and responsible investing. Results indicate that while some funds consistently outperform market benchmarks, others struggle with volatility and lower-than-expected returns. Factors influencing performance include market conditions during the COVID-19 pandemic, fund management strategies, and the overall financial environment in Nepal. The findings suggest that mutual funds in Nepal offer viable investment options but require strategic management to optimize returns. Investors are encouraged to consider both financial and non-financial factors when selecting funds. The study concludes that mutual fund performance in Nepal is mixed, highlighting the importance of diversification, active fund management, and regulatory support to enhance investor confidence and market growth. These insights contribute to the broader understanding of mutual fund performance in emerging markets like Nepal.