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Part 5

Mutual funds in Vietnam allow investors to pool their money together to invest in a variety of assets like stocks, bonds, and money market instruments. There are different types of mutual funds based on factors like asset class, investment objective, strategy, and risk profile. The mutual fund industry in Vietnam has grown significantly since the first fund launched in 1992 and is now regulated by the State Securities Commission. Major mutual fund managers in Vietnam today include Vietcombank, Dragon Capital, IPAAM, VNDirect, and others.

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30 views4 pages

Part 5

Mutual funds in Vietnam allow investors to pool their money together to invest in a variety of assets like stocks, bonds, and money market instruments. There are different types of mutual funds based on factors like asset class, investment objective, strategy, and risk profile. The mutual fund industry in Vietnam has grown significantly since the first fund launched in 1992 and is now regulated by the State Securities Commission. Major mutual fund managers in Vietnam today include Vietcombank, Dragon Capital, IPAAM, VNDirect, and others.

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Part 5: Mutual Funds in Vietnam

*Definition: Mutual Fund is a pool of liquidity that an investment company places in


various securities and derivatives with the goal of producing a certain return. Mutual
Funds may carry greater or lesser risk, depending on their particular investment goals.
Mutual Funds are actively managed by the company to maintain the investment goals.
*Classcifications: Mutual funds in Vietnam can be classified into various categories
based on different criteria. Here are some common classifications of mutual funds in
Vietnam:
1. Asset Class:
 Equity Funds: These funds primarily invest in stocks or shares of
companies listed on the Vietnamese stock exchanges.
 Fixed Income Funds: These funds invest in fixed-income securities issued
by the Vietnamese government, state-owned enterprises, or corporate
entities.
 Money Market Funds: These funds invest in short-term, low-risk money
market instruments, such as government bonds and treasury bills,
providing liquidity and capital preservation.
2. Investment Objective:
 Growth Funds: These funds aim to generate long-term capital appreciation
by investing in stocks of companies with growth potential in Vietnam.
 Income Funds: These funds focus on generating regular income by
investing in fixed-income securities, such as government bonds or
corporate bonds.
 Balanced Funds: Balanced funds invest in a mix of equities and fixed-
income securities to provide a balance between capital appreciation and
income generation.
3. Investment Strategy:
 Active Funds: These funds are actively managed by fund managers who
make investment decisions based on market analysis and research.
 Passive/Index Funds: Passive or index funds aim to replicate the
performance of a specific market index in Vietnam, such as the VN-Index
or VN30-Index.
4. Risk Profile:
 High-Risk Funds: These funds have a higher risk tolerance and invest in
assets that may have higher volatility, such as small-cap stocks or
emerging sectors.
 Low-Risk Funds: These funds have a lower risk tolerance and invest in
more stable assets, such as large-cap stocks or government bonds.
5. Specialized Funds:
 Sector Funds: These funds focus on specific sectors or industries within
Vietnam, such as technology, real estate, or banking.
 Infrastructure Funds: These funds invest in infrastructure-related projects
and companies, supporting the development of Vietnam's infrastructure
sector.
6. Investor Type:
 Retail Funds: These funds are open to individual investors and typically
have lower minimum investment requirements.
 Institutional Funds: These funds are designed for institutional investors,
such as pension funds, insurance companies, or corporations, and may
have higher minimum investment thresholds.

*The stages of formation and development: Mutual funds in Vietnam have undergone
several stages of development since their introduction in the early 1990s. Here are the
key stages and developments of mutual funds in Vietnam:
1. Introduction and Early Years (1990s-2000s):
 The first mutual fund in Vietnam, the "Vietnam Fund" was established in
1992 as a joint venture between the State Bank of Vietnam and Dragon
Capital, a foreign investment management company.
 Initially, mutual funds were mainly targeted at foreign investors, as the
Vietnamese stock market was not fully developed.
 The early years witnessed the launch of a few more mutual funds, such as
the Vietnam Securities Investment Fund and the Vietnam Enterprise
Investment Fund.
2. Regulatory Framework (2005-2007):
 In 2005, the Vietnamese government enacted the Law on Securities, which
provided a legal framework for the development of the securities market,
including mutual funds.
 The State Securities Commission (SSC) was established as the regulatory
authority responsible for overseeing mutual funds and other securities-
related activities.
 The regulatory framework aimed to enhance transparency, protect
investors' interests, and promote the growth of the mutual fund industry.
3. Expansion and Diversification (2008-2015):
 The mutual fund industry experienced significant growth during this
period, with the introduction of new funds and increased participation
from domestic investors.
 More asset management companies entered the market, offering a variety
of mutual fund products to cater to different investment objectives and
risk profiles.
 The number of mutual funds increased, covering various asset classes,
including equities, bonds, and money market instruments.
 The government also introduced policies to encourage mutual fund
investments, such as tax incentives and relaxed investment regulations.
4. Market Development and Reforms (2016-2020):
 The Vietnamese stock market witnessed significant development,
attracting both domestic and foreign investors.
 Mutual funds played a crucial role in channeling investments into the
market, providing liquidity and diversification for investors.
 Reforms were implemented to improve market efficiency, enhance
corporate governance, and strengthen investor protection.
 The introduction of open-end funds, allowing investors to enter or exit the
fund at any time, further expanded the options available to investors.
5. Recent Developments (2021-present):
 The mutual fund industry in Vietnam continues to evolve, with a focus on
investor education and expanding the range of investment products.
 Sustainable and socially responsible investment (SRI) funds have gained
traction, reflecting the growing awareness of environmental, social, and
governance (ESG) factors.
 The government and regulatory authorities are working to further develop
the capital market infrastructure and attract more foreign investors.
 Technology-driven platforms and digital channels are being utilized to
facilitate access to mutual funds and improve investor experience.
*The current operation situation: Here are some key points regarding the operation
situation of mutual funds in Vietnam:
1. Growth and Market Size: The mutual fund industry in Vietnam has experienced
significant growth in recent years, both in terms of the number of funds and total
assets under management (AUM). The market size of mutual funds has been
expanding, reflecting increased investor participation and confidence in the
Vietnamese capital market.
2. Diverse Offerings: Mutual funds in Vietnam offer a variety of investment options,
including equity funds, fixed income funds, money market funds, and balanced
funds. This diversification provides investors with choices to align with their
investment objectives and risk profiles.
3. Regulatory Framework: The operation of mutual funds in Vietnam is regulated by
the State Securities Commission (SSC) under the Ministry of Finance. The SSC
plays a crucial role in overseeing and regulating mutual funds and ensures
compliance with relevant laws and regulations.
4. Increased Participation by Retail Investors: The mutual fund industry in Vietnam
has witnessed increased participation by retail investors, driven by rising
awareness, investor education initiatives, and the availability of more user-
friendly investment platforms. Retail investors' participation has contributed to
the growth of the industry.
5. Focus on Investor Protection: There has been an emphasis on strengthening
investor protection measures in the mutual fund industry. Regulatory authorities
have been working to enhance transparency, disclosure requirements, and
governance standards to safeguard investor interests.
6. Market Performance and Returns: The performance of mutual funds in Vietnam
is subject to market conditions and the investment decisions made by fund
managers. Investors should carefully evaluate historical performance, risk factors,
and fees before investing in mutual funds.

Mutual funds in Vietnam today that you can refer to:


- Fund management company of Vietcombank VCBF, established in 2005;
- DCBC Dragon Capital Vietnam Fund, present in Vietnam since 1994;
- IPAAM fund management company was established in 2008 and is fully owned by
VNDirect;
- Techcombank TCEF stock investment fund;
- Hung Thinh Vinawealth VEOF stock investment fund;
- Vietnam Dynamic Investment Fund VFMVFA;
- Investment fund of
- Bao Viet BVFED;
- Periodic investment fund of MBBank MBVF;
- Investment fund of VIC Partners;
- Vinasa Angels Network investment fund
- Angel 4 Us Company Limited - community of angel investors for startups in Vietnam
- Hanoi Young Business Association Hanoi Young Business Association;
- IMJ Investment Partners investment fund (Singapore);
- IDG Ventures Vietnam investment fund;

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