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. 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 Mr. Tran Thanh 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.
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.
Mr. Tran Thanh Tan said many funds offered investors with programmes that only needed a small amount of capital, from 1 million VND, 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, Shareholders of Saigon Securities Inc (SSI) on April 25 approved the company’s expansion into derivatives trading, which has yet to begin in Vietnam, however. A circular issued by the Ministry of Finance in January stipulates that a securities company must obtain approval from its shareholders to begin derivative trading.
SSI derivative trading will cover broking, proprietary trading, consultancy and clearance and settlement services. The company will also issue covered warrants once legal regulations are in place.
Its SSI Asset Management Company was the first domestic fund to raise money from European institutional investors, using the undisclosed sum to establish the Andbank Investment SIF - Vietnam Value and Income Portfolio.
It also raised 32 million USD in cooperation with Japanese partner Daiwa Securities Company for the DAIWA-SSIAM Vietnam Growth Fund II LP, which focuses on private companies operating in the agriculture, aquaculture and consumer goods sectors.
