PERFORMANCE EVALUATION OF CLOSED END MUTUAL FUNDS IN NEPAL

Abstract

This study aims to examine the performance of listed close end mutual funds in Nepal. For this purpose, ten close end mutual funds are selected as sample size of the study which was matured only, during 2016/17-2020/21. The secondary data are used to examine the analysis of financial performance of selected mutual funds in Nepal. The secondary data used in this study are obtained from published annual reports and websites of the close end mutual fund companies. This study employed descriptive and casual comparative research design. The tools used on the study are statistical tools, which are descriptive statistics, correlation coefficient and regression analysis. Return on assets and Return on equity are the selected dependent variables while the remaining variables—Dividend Payout Ratio (DPR), Fund Assets Growth (FAG), Fund Size (FS), Management Fee (MF), GDP Growth (GDPG), and Inflation Rate (I)—are independent variables. The result found that of return on assets has significant positive relationship with dividend payout ratio, fund size, fund assets growth and GDP growth rate. In addition, Dividend payout ratio, fund assets growth and GDP growth rate also have significant positive association between return on equity, suggesting that higher dividend payout ratio, fund size, fund assets growth and growth rate in GDP may lead to increase profitability of mutual funds. Further regression analysis further confirmed the significance effect of fund size and fund assets growth on return on assets and return on equity showing increases in fund size and fund assets growth associated with increases in return on assets and return on equity . However there was significant negative impact of management fee implies that increase in management fee can decrease the return on equity of mutual funds in Nepal. Other variables such as dividend per share, GDP growth and inflation rate had statistically insignificant impact on profitability of mutual funds in Nepal.