This year will be significant for fund management companies as they prepare to apply a new cycle of regulations on open-end funds, says VietFund Management Co general director Tran Thanh Tan.
An open-end fund is a collective investment scheme which can issue and redeem shares at any time. An investor generally purchases shares directly from the fund itself rather than from other shareholders, in contrast with a closed-end fund, which typically issues all of its shares at the outset, with such shares then being traded on an exchange or between investors themselves.
"With open-end funds, fund management companies can launch diversified products and investors have wider choices of investment types," Tan said.
About 80 percent of investment funds worldwide were now open-end, he explained, with closed-end funds existing mainly in developing countries or countries with incomplete legal foundations for financial markets.
New regulations on the establishment and operation of open-end funds in Vietnam, adopted late last year, will allow investors to withdraw their capital periodically at a value close to the fund's net asset value (NAV), Tan noted.
The new rules will also make it easier for funds to increase their charter capital, allowing them to take advantage quickly of market rallies without facing cumbersome procedures to increase capital.
"The biggest problem in Vietnam is that the margin between funds' market value and their NAV is very high," he said. "If there is not a substitutional model, domestic fund managers can hardly operate as investors have almost no motive to pour money into funds."
VietFund Management has anticipated the legal framework for open-end funds for four years and is well-prepared for it in terms of facilities and human resources, Tan said. VietFund expected to launch its first open-end fund in the second quarter with an initial capital of 200-500 billion VND (9.5-23.8 million USD).
Tan also mentioned the possibility that VietFund would convert its VF1 and VF4 funds from closed-end to open-end this year, a plan he said would be presented in an upcoming shareholders' meeting./.
An open-end fund is a collective investment scheme which can issue and redeem shares at any time. An investor generally purchases shares directly from the fund itself rather than from other shareholders, in contrast with a closed-end fund, which typically issues all of its shares at the outset, with such shares then being traded on an exchange or between investors themselves.
"With open-end funds, fund management companies can launch diversified products and investors have wider choices of investment types," Tan said.
About 80 percent of investment funds worldwide were now open-end, he explained, with closed-end funds existing mainly in developing countries or countries with incomplete legal foundations for financial markets.
New regulations on the establishment and operation of open-end funds in Vietnam, adopted late last year, will allow investors to withdraw their capital periodically at a value close to the fund's net asset value (NAV), Tan noted.
The new rules will also make it easier for funds to increase their charter capital, allowing them to take advantage quickly of market rallies without facing cumbersome procedures to increase capital.
"The biggest problem in Vietnam is that the margin between funds' market value and their NAV is very high," he said. "If there is not a substitutional model, domestic fund managers can hardly operate as investors have almost no motive to pour money into funds."
VietFund Management has anticipated the legal framework for open-end funds for four years and is well-prepared for it in terms of facilities and human resources, Tan said. VietFund expected to launch its first open-end fund in the second quarter with an initial capital of 200-500 billion VND (9.5-23.8 million USD).
Tan also mentioned the possibility that VietFund would convert its VF1 and VF4 funds from closed-end to open-end this year, a plan he said would be presented in an upcoming shareholders' meeting./.
