Stock investment funds to see growth this year
Stock investment funds would enter an opportunity of growth thanks to the on-going economic recovery and foreign capital inflows this year, said Tran Thanh Tan, Vice Chairman and CEO of the Vienam Investment Fund (VFM).
Tan said the year was forecast to boost the local stock market with many IPOs of giant state-owned enterprises as well as the possibility of joining the MSCI’s emerging markets.
Switching from closed-end funds to open-end funds became an inevitable trend that brought benefits to local investors and market developers, he said.
The majority of investors in Vietnam are individuals, who do not have enough capital for real estate investments and have no intention of depositing their money in banks for little profit. As they have little experience in the stock market, the CEO said that an open end fund would be an individual investor’s best choice.
Tan said many funds offered investors with programmes that only needed a small amount of capital, from VND1 million, and had simple procedures. Currently, most of managed funds offered diversified products suitable for businesses and individuals.
Seeing the potential, nine open-end funds were established last year, including VF4. VFB and VF1, which were among the most profitable and successful in the local market.
However, not all funds achieved the same good results. According to the latest business results of seven funds which posted their financial results of 2015, four reported losses due to being less attractive to local investors.
The CEO said that investment funds were quite new for most local investors who did not yet trust others to manage their investments in such risky areas like the stock market. He added that local investors would spend their money on funds that were transparent and high profile.
According to the State Securities Commission (SSC), by the end of 2015, the fund industry has 30 stock investment funds including 17 open end funds.
In addition, foreign investment flows were returning through the Trans-Pacific Partnership (TPP) and free trade agreements. Also, positive businesses and better development of consumer goods, food and technology industries would also lift the market.
While Tan said the market potential was definitely a chance for local funds, especially open-end funds, to grow. Tan said an open-end fund is deemed to offer a more flexible investment option as investors can buy and sell shares directly from the fund itself. Closed-end funds typically issue all their shares at the outset, with such shares being tradable between investors thereafter.
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The majority of investors in Vietnam are individuals, who do not have enough capital for real estate investments and have no intention of depositing their money in banks for little profit. As they have little experience in the stock market, the CEO said that an open end fund would be an individual investor’s best choice.
Tan said many funds offered investors with programmes that only needed a small amount of capital, from VND1 million, and had simple procedures. Currently, most of managed funds offered diversified products suitable for businesses and individuals.
Seeing the potential, nine open-end funds were established last year, including VF4. VFB and VF1, which were among the most profitable and successful in the local market.
However, not all funds achieved the same good results. According to the latest business results of seven funds which posted their financial results of 2015, four reported losses due to being less attractive to local investors.
The CEO said that investment funds were quite new for most local investors who did not yet trust others to manage their investments in such risky areas like the stock market. He added that local investors would spend their money on funds that were transparent and high profile.
According to the State Securities Commission (SSC), by the end of 2015, the fund industry has 30 stock investment funds including 17 open end funds.
