Oct 24, 2012

Vietnam - Vietnam to welcome first open-end fund in 2012

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VietNamNet Bridge – Watchdog agencies have every reason to believe that the first open-end investment fund would make debut on the stock market this year.

Earlier this year, right after the Circular No. 183 guiding the establishment and management over open-end funds took effects, the Vietnam Fund Management Joint Stock Company (VFM) applied for the establishment of an index fund – VN30.

However, according to the State Securities Commission (SSC), VFM designed its product in accordance with the operation principle of an index fund, which is similar to that of exchange traded fund ETF, while the legal framework for the products has yet taken shape. Therefore, SSC then asked VFM to make some changes with the plan.

The reason, together with some other factors, have delayed the establishment of the VFM’s VN30 fund. Currently, VFM is preparing to shift one of the close-end fund it is managing into an open-end fund.

A senior official of SSC has also revealed that the commission has received the applications for establishing two funds put under the management of MB Capital and VinaWealth. The funds, once set up, would specialize in making investment in bonds.

The official said the watchdog agency is considering the files submitted by the two companies before licensing. If everything goes smoothly, Vietnam would see the first open-end funds to make debut on the market this year.

Nguyen Thanh Long, Head of the Fund Management Department under SSC, said the management agency encourages fund management companies to establish open funds. Therefore, SSC is guiding the companies to follow necessary steps and fulfill the procedures soon to launch the new products into the market.

The appearance of open-end funds on the market will not only give more choices to investors, but also help restore investors’ confidence. This would also help increase the number of institutional investors – the thing that Vietnam is striving for.

Encouraged by the watchdog agency, fund management companies have shown their determination to launch open-end funds right in 2012, despite the current macroeconomic difficulties and the gloomy stock market.

Ngo Long Giang, a senior executive of MB Capital, said MB Capital is hurrying up with its preparation in terms of documents so as to soon obtain the license to put the open-end fund’s certificates on sale.

MB Capital is making hectic preparations in terms of technology and labor force to run a bond investment fund right in 2012.

MB Capital plans to seek at least 50 billion dong worth of capital to launch the product. Of this amount, 40 percent of the capital would be raised from foreign investors.

Giang has revealed that obtaining profits would not be the most important goal of the product. More importantly, MB Capital wants to create initial foundations for new products, attracting the investors’ intention to the new products within the frame of open-end funds.

Dang Vi Thanh, a senior executive of VinaWealth, has also affirmed that the management company has got ready for the running of the bond investment fund once it gets the approval from SSC.

According to Thanh, one of the strictest requirements on management companies when running open-end funds, is that the companies have to show to the watchdog agency its capability to meet the requirements in terms of technical infrastructure.

A question has been raised that why bond investment fund would be the first kind of open-end funds to be launched into the market?

Analysts say despite the current difficulties, the bond market remains relatively attractive and it proves to be more stable and less risky than others. Therefore, bond would be the good choice for open-end funds in the immediate time.

Compiled by C. V

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