Illustrative photo (Source: internet)

Hanoi (VNA) – In the first half of the year, many open-ended mutual funds have reported solid results, with their growth rates averaging 1.65-12 percent.

The highest growth in net asset value (NAV), estimated at 12 percent, was reported by balanced funds like VCBF Tactical Balanced Fund and VCBF Blue Chip Fund of Vietcombank, VF1 and VF4 of Vietnam Fund Management Company, and SSI-SCA of SSI Sustainable Competitive Advantage Fund.

Funds investing in debt saw lower growth rates of 1.65-4.84 percent due to less favourable conditions. Due to low and steady interest rates since 2015, returns on debt-focused funds have been modest.

In Vietnam, there are now 18 open-ended funds, including five debt funds, four balanced funds and nine equity funds, that have over 2.4 trillion VND (over 106.66 million USD) under management.

There are six closed-ended funds including the Vietnam Enterprises Investments Limited and VAM Vietnam Strategic Fund.

Debt funds’ investments include government, corporate, municipal and convertible bonds, along with others like mortgage-backed securities.

A balanced fund is a mutual fund that generally has a 50-50 mix of stock and debt.

Admittedly, the majority of the mutual funds’ investments come from institutions that are their partners.

This has been especially true of MB Capital Value Fund, Bao Thinh Bonds Investment Fund and Vietcombank funds like VCBF-BCF and VCBF-TBF.

They have all seen their investments grow by 20 percent this year.

Market observers attribute the funds’ success to various reasons, one of which is the Government’s efforts to improve the legal framework for the securities market.

Accordingly, many new products are expected to be introduced in the near future, encouraging investors to further pump money into the funds.

The economic stability and improved incomes of the middle class in the country have also encouraged people to invest in financial products instead of depositing money in the banks as they used to do.

Some eight million Vietnamese now have a daily household expenditure averaging 10-100 USD, which is the criterion set by the Organisation for Economic Cooperation and Development for a family to be classified as middle class.

The country’s participation in the Trans-Pacific Partnership (TPP) agreement is also an important reason for securities, especially mutual funds, to become more attractive to investors.

The TPP deal is expected to bring an impetus to the Vietnamese economy to develop by hastening the process of economic reform so that it can adapt to TPP requirements.

This is also expected to improve the transparency of the securities market and raise it to international standards.

Analysts said, however, that authorities should consider tax breaks to encourage more investment in mutual funds.-VNA