Mutual funds
Open-end vs closed-end mutual funds in Nepal.
Nepal has both kinds and they are not variations of one product. One lists on NEPSE and usually trades below its own net asset value. The other never lists and is bought at NAV. The difference decides how and when you can get your money out.
6 min read · Updated · 26 August 2026
The short answer
Closed-end funds list on NEPSE, have a fixed size and a maturity date, and usually trade below NAV. Open-end funds never list, have no maturity, and are bought and redeemed directly from the fund manager at NAV.
Start with NAV
Net asset value is what one unit of the fund is genuinely worth: everything it owns, minus what it owes, divided by the number of units.
Every fund publishes its NAV. It is the only honest measure of what you hold. Whether it is also the price you pay depends entirely on which kind of fund it is.
Open-end funds
An open-end fund creates new units when someone invests and cancels them when someone redeems. The pot grows and shrinks.
- Not listed on NEPSE.
- You buy and redeem through the fund manager, at NAV.
- No maturity date.
- Practical for a monthly SIP.
The price you get is the value of what you own. No discount, no premium, no bidding against other investors.
Closed-end funds
A closed-end fund raises a fixed amount once, for a fixed term, and then lists on NEPSE. The number of units never changes.
- Listed and traded on NEPSE, like a share.
- Price is whatever buyers and sellers agree, not NAV.
- Has a maturity date, at which the scheme winds up and pays out.
- You can only put money in during the initial offer. After that you are buying units from another investor.
The discount, and what it actually means
Closed-end units in Nepal almost always trade below NAV. A fund with a NAV of Rs 11 might trade at Rs 9.
The instinct is that this must be free money. It is not, and the reason is worth understanding.
Your money in a closed-end fund is locked until maturity. The only way out before then is selling to someone else on NEPSE. Cash you cannot reach is worth less than cash you can, so the market prices the inconvenience. This happens in closed-end funds in every market in the world.
The discount closes reliably only at maturity, when the scheme pays out on NAV. Until then it can persist for years, and it can widen. Buying at a discount is an opportunity if you intend to hold to maturity. It is not a trade that has to work out next quarter.
Which one suits you
If you want to invest a fixed amount every month and be able to get out at a fair price: open-end.
If you are content to lock money away until a known date, and you are buying the discount deliberately with maturity in mind: closed-end.
What does not work is buying a closed-end fund expecting open-end flexibility, then discovering you can only exit by selling at a discount to someone else.
Common mistake to avoid
Judging a closed-end fund by its market price alone. A unit at Rs 9 tells you nothing without the NAV beside it. Rs 9 against a NAV of Rs 11 is one situation; Rs 9 against a NAV of Rs 8 is a completely different one. Always read the two numbers together.
Pro tip
Before you buy any scheme, find its published NAV history and its portfolio. Those two documents tell you more than any performance claim, and both come from the fund manager rather than from a forum. Verify the scheme is licensed by SEBON.
Common questions
Answered plainly.
Net asset value is what one unit of the fund is actually worth: everything the fund owns, minus what it owes, divided by the number of units. Fund managers publish it regularly. For an open-end fund NAV is the price you transact at. For a closed-end fund it is the yardstick you compare the NEPSE price against.
Because your money is locked until the scheme matures and the only exit before then is selling on NEPSE. A rupee you cannot freely access is worth less than one you can, so the market applies a discount. Discounts on closed-end funds are normal worldwide, not a Nepal-specific fault.
Not automatically. You are buying assets for less than their stated value, which sounds like free money, but the discount may persist or widen for the entire time you hold. It closes reliably only at maturity, when the scheme pays out on NAV. So the discount is an opportunity only if you can wait that long.
An open-end fund, in general. You can buy and redeem units at NAV on a dealing day, which is what makes a recurring monthly instruction practical. A closed-end fund only accepts money during its initial offer, and after that you are buying units from another investor on NEPSE at the market price.
You can normally redeem units at NAV on a dealing day, subject to the scheme's own rules, which may include an exit charge if you redeem early. Read the scheme document for the exit load and the dealing days before you invest, not after.
The industry has grown to roughly 58 schemes across about 19 licensed fund houses, split between closed-end schemes that trade on NEPSE and a smaller number of open-end schemes bought at NAV. The exact counts move as new schemes launch and old ones mature, so treat any figure as a snapshot.
Read next
The rest of the guide.
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- Debentures and corporate bonds in NepalFixed interest, fixed term, listed on NEPSE. How they differ from shares and deposits, and what SEBON has drafted.
- ASBA vs C-ASBA: what is the difference?Your money is blocked, not taken. What the CRN is for, and the usual reasons an application gets rejected.
- FPO vs IPO: what Nepali investors need to knowAn FPO comes from a company already listed, and does not have to be priced at Rs 100. What the premium means.
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