Siddhartha Systematic Investment Scheme
What is a Mutual Fund?
A mutual fund is an investment vehicle that pools investors’ money and invests on behalf of the investors. It is an instrument that raises money from a group of people and invests their money in equities, bonds and debentures, and other money market instruments. Each investor owns units, which represent a portion of the holdings of the fund. Mutual funds are managed by professional fund managers who create specific portfolios with regards to the investment objectives.
Unlike equities, mutual fund units do not give its unit holders any voting rights. A share unit of mutual fund represents investments in many different stocks (or other securities) instead of just one holding. That’s why the price of a mutual fund share is referred to as the net asset value (NAV).
What is Closed-End Vs Open-End Mutual Fund?
A Closed-end fund offers a fixed number of units and raises capital through the primary market via New Fund Offer (NFO) and operates for fixed number of period as derived in the fund’s prospectus.
After the issuance of NFO; the closed-end fund will be listed on the stock exchange. The potential Investors and the current investors (generally known as Unitholders) can Buy and Sell through a registered Brokerage firm on the secondary market (NEPSE) or the Current investor can hold the mutual fund till maturity and can redeem their investments at Net Assets Value at redemption date NAV.
An open-end fund is an investment vehicle that uses pooled assets, which allows for ongoing new contributions and withdrawals from investors of the pool. An open-end fund is one that is available for subscription all through the year and is not listed on the stock exchanges.
The Fund manager sells shares directly to investors and redeems them as well. Investors have the flexibility to buy or sell any part of their investment at any time at Applicable Net Asset Value (NAV). There is no maturity period in open-end fund and as long as there is demand for fund it goes on issuing share no matter how many investors are there.
What is “Siddhartha Systematic Investment Scheme”?
“Siddhartha Systematic Investment Scheme (SSIS)” -an Open-Ended Mutual Fund Scheme, has been designed as the first ever Open-Ended Mutual Fund Scheme of Siddhartha Mutual Fund after implementation of the Mutual Fund Regulations, 2067 and Mutual Fund Guidelines, 2069 issued by SEBON. The main objectives of the scheme are to encourage the conversion of savings into investments regularly and to provide steady returns to unit-holders over the long period of time.
Benefits of investing in “Siddhartha Systematic Investment Scheme”?
A lot of investors do not have the time or resources to conduct their research and purchase individual stocks. This is where professional management becomes quite useful. Several people invest in mutual funds for the professional expertise it provides to one’s investments. A dedicated team of fund manager, researchers and analysts continuously research, select, trade and monitor performance of the securities.
“Siddhartha Systematic Investment Scheme” aims to minimize risk through diversification by investing in equities, debentures/bonds, money market instruments, bank deposits, other sectors prescribed by SEBON etc. The investments are spread over multiple assets classes, whereby it helps us to create an assorted portfolio that segregates the headwinds experienced in various sectors. The investments are made in a mixture of assets according to one’s risk appetite.
Mutual funds are more or less classified as liquid investments. As an investor you can redeem your unit holdings at any point (subject to exit load,). “Siddhartha Systematic Investment Scheme” will be valued at applicable NAV which be calculated on a daily basis, and an investor can sell their investments anytime without worrying about finding a buyer at the right price since the investor can redeem their units to the fund manager giving you any time access to your money. Further, funds are well integrated with the banking system — which means that most funds can transfer money directly to your bank account.
Mutual Funds offer a high degree of transparency as investment decisions made by the fund manager are highly transparent and the Investors can stay updated on information pertaining to the markets and schemes by logging on to our website and view the monthly reports that we publish and also view factsheets, offer documents, annual reports, etc.
Rupee Cost Averaging
When you invest in mutual funds through the SIP investment route, you can benefit from “rupee cost averaging”. This means you buy a larger number of units when markets are low and a smaller number of units when markets are high. This averages out your total cost while safeguarding you from the ups and downs of the market.
When you start a SIP, every month a fixed amount gets invested in your mutual fund. Investors receive shares in the form of units with the money invested and depending on the fund’s existing net asset value (NAV). When the NAV is high, fewer units are allotted. Similarly, when the NAV is low, mutual fund investors are allotted more units.
Power of Compounding
Compounding refers to the reinvestment of earnings at the same rate of return to constantly grow the principal amount, year after year. It is a technique of making your money work harder for you and is perhaps the most powerful tool that an average investor can use to plan for many of life’s financial goals, including retirement.
Government has currently been keeping Mutual funds in its priority. As of now, its incomes are not taxed.
What are the various investment options that “Siddhartha Systematic Investment Scheme” are offering?
In order to meet various needs of investors “Siddhartha Systematic Investment Scheme” have different investment options such as;
Systematic Investment Plan (SIP)
SIP is an investment tool which allows an investor to invest a specific amount regularly in the mutual fund scheme. SSIS’s SIP will allow the investors to save regularly with a smaller amount of investment, and likewise, an investor need not worry about the timing of the stock markets when investing, as they will benefit from both the bullish and bearish market trends.
Under SSIS SIP plan, the investors are given an option to enroll into the SIP whereby regular interval payments from the investors are routed to SSIS’s designated bank account and, or by providing a standing instruction to the investors bank directing to release the amount in favor of SSIS SIP investments.
Mr. Sharma decides to invest NPR 1,000 per month for a year.
When the market price of shares fall, Mr. Sharma benefits by purchasing more units; and is protected by purchasing less when the price rises as explained below.
|Date||NAV||Approx number of units you will get at 1000|
Within one year, Mr. Sharma has 1,186 units by investing just NPR 1,000 every month at an average cost of 12,000/1,186.15 = 10.1170. This is as against 12,000/10 = 1,000 units or 12,000/11.5 = 1,043.5 units or 12,000/9 = 1,333.3 units if Mr. Sharma had invested lump sum on 1 Jan, 1 Jun or 1 May, respectively.
Dividend Reinvestment Plan (DRiP)
In the case of Dividend Reinvestment Plan (DRiP), Siddhartha Systematic Investment Scheme (SSIS) when declaring the annual dividends, the unitholders have the option from re-investing their dividends through two options:
- Growth Option – In the case of Growth Option, the unit holders’ yearly dividend will be reinvested back to the fund by purchasing additional units from the amount received as annual dividend
- Dividend Option – In the case of Dividend Option, the annual dividends announced will be paid out to unitholders at the time of dividend distribution
Why should you invest through an SIP?
The first benefit of SIP is, it imparts financial discipline to your life. Secondly, it helps you to invest regularly without wrestling with market mood, index level, etc. For example, if you are supposed to put a fixed amount every month in any mutual fund scheme, you need to find time to do it. When you have the time, you might be worried about market conditions and think of postponing your investments. Or you might be thinking of investing more if the mood is optimistic. SIP puts an end to all these predicaments. The money is automatically invested regularly in a scheme without any effort from your part.
How to enroll into SSIS SIP?
SIP’s can be enrolled in the following ways:
- Visit Siddhartha Capital Limited, Distribution Outlets of Siddhartha Bank Limited or Distribution Agents whereby, an SIP Registration form is needed to be filled out to enroll into SSIS SIP
- Log in to https://mutualfund.siddharthacapital.com and fill out the SIP Registration details
Who can enroll into SSIS SIP?
Any Nepali individual and a company registered in Nepal (having a valid demat account) can opt and enroll for SSIS SIP.
How much money do I need to start an SIP?
You can start investing in most mutual fund schemes via SIP with a minimum of Rs 1000.
Can I customise my SIP?
Yes, you can. Though the most popular SIP is investing a fixed amount every month, investors can customize the way they put money via SIPs. Investors can contact Siddhartha Capital Limited at (email@example.com) to customize their SIP investments
How do I make payments for SIP after registration?
After the successful registration of SIP facility, one can pay the SIP payment on their respective due dates through:
- Online medium (Connect IPS, Esewa, Khalti and Siddhartha BankSmart)
- Visiting Siddhartha Capital counter and Distribution Outlets of Siddhartha Bank
- Enrolling on Request to Pay(R2P) mechanism of NCHL’s auto debit mechanism
What will happen if I miss the SIP due date and payment?
If an investor misses out on the scheduled SIP date due to various reasons; the investor can opt to make the payment for the missed SIP on any date before the next scheduled SIP date and we shall purchase the SIP units on the day the amount has been credited into our bank account.
How can amend my SIP due dates and amount?
The investor can amend their SIP due dates and amounts through online medium by emailing the SIP amendment form available at our website to firstname.lastname@example.org or by visiting Siddhartha Capital Limited and Distribution Outlets of Siddhartha Bank Limited.
Can I sell my units under SIP enrollment?
No, an investor can only sell the units held under their name/institutions’ name after they have cancelled their SIP. The units purchased under SIP facility shall be locked (till the investor cancels the SIP facility) and can sell only after cancellation of SIP.
How do I cancel my SIP facility?
The investor can cancel their SIP facility through online medium by emailing the SIP cancellation form available at our website to email@example.com or by visiting Siddhartha Capital Limited and Distribution Outlets of Siddhartha Bank Limited.
Are there any charges levied for SIP cancellation?
There are no charges that will be charged to the investor when they cancel their SIP facility.
Does return of “Siddhartha Systematic Investment Scheme” be guaranteed?
SSIS is similar to any equity investment where dividends are only paid when profits are earned as well as capital appreciation is made through increase/decrease in NAV and subject to market risk. So, it does not offer guaranteed return to any investors.
Will units of “Siddhartha Systematic Investment Scheme” listed in NEPSE?
The units of “Siddhartha Systematic Investment Scheme” will not be listed in Nepal Stock Exchange (NEPSE) or any stock exchange; whereby, the trading will be facilitated through the Fund Manager (Siddhartha Capital Limited) and designated branches of Siddhartha Bank Limited and authorized agents appointed by the Fund Manager
From where the investors can trade the units of “Siddhartha Systematic Investment Scheme”?
The Purchase and Redemption will be facilitated through the Fund Manager (Siddhartha Capital Limited) and designated branches of Siddhartha Bank Limited and authorized agents appointed by the Fund Manager.
What is sale and repurchase/redemption price?
The price or NAV a unit holder is charged while investing in an open-ended scheme is called sales price. Repurchase or redemption price is the price or NAV at which an open-ended scheme purchases or redeems its units from the unitholders. It may include exit load, if applicable.
What is the lock-in period for “Siddhartha Systematic Investment Scheme”?
There is no lock-in period of investments made in Siddhartha Systematic Investment Scheme. The trading of the units shall be commenced from a maximum 3 months from the date of allotment of units.
What are the charges that investors should pay to purchase/redeem of the units?
The following charges shall be applicable to the investors to purchase/redeem the units of “Siddhartha Systematic Investment Scheme”
Entry Load (Applicable for Re-purchase of Units): None.
Exit Load (Applicable for Redemption of Units):
– @ 1.5% of applicable NAV within 3 years of purchase
– No exit load to be levied after 3 years of purchase
DP Fee : Applicable charges as per CDS Bylaws.
SEBON Fee : Applicable fee as per Mutual Fund Regulations and Guidelines.
Capital Gain Tax : Applicable Tax as per tax rules and regulation.
What is the Price of “Siddhartha Systematic Investment Scheme”?
The units during the time of New Fund Offer (NFO) will be Rs. 10 per unit and subsequently the prices will be determined by the applicable NAV which can be viewed from Siddhartha Capital Limited’s website
From where the investors can obtain Price of “Siddhartha Systematic Investment Scheme”?
The Investors can obtain price (daily applicable NAV) of SSIS from Siddhartha Capital Limited’s website, or by enquiring about the NAV from Siddhartha Capital Limited’s office, any branches of Siddhartha Bank Limited (Distribution Outlets) or Authorized Agent.
Will I have to open new Demat account to purchase the units of “Siddhartha Systematic Investment Scheme”?
It is not necessary to open new demat account to purchase SSIS if you already have one. It can be purchased by using your existing demat account maintained at any depositary.
How much one investor can invest in “Siddhartha Systematic Investment Scheme”?
The minimum units’ up to 100 and maximum units’ is 10% of the fund size can be hold/invested in Siddhartha Systematic Investment Scheme by single investor.
What is the size of “Siddhartha Systematic Investment Scheme”?
During the New Fund Offer (NFO) the size was NPR. 20 crores (or 200 million units). Likewise, the size of the fund will increase when investors will purchase additional units into the fund and will decrease when investors redeem their units from the fund. So, the scheme size will not fixed as compared to close end funds.
Where will the investors get their units of “Siddhartha Systematic Investment Scheme”?
The investors can get their units of Siddhartha Systematic Investment Scheme in dematerialized form in their respective Demat account. Siddhartha Capital Limited will arrange to debit or credit the units of Siddhartha Systematic Investment Scheme from the Demat account accordingly.
Who can invest in SSIS?
Any Individual having valid Demat Account (BOID) and any entity whose policy does not restrict them from investing can invest in SSIS.
Can NRN or Nepali Residing Outside of Nepal Invest in SSIS?
Whether NRN or Nepali Residing outside Nepal who have a valid Demat Account (BOID) can invest in SSIS.