VietNamNet Bridge – While all trade moves by foreign securities investors have been regularly updated, the transactions of domestic investment funds have just been reported sporadically.

The 5 groups of fund management companies

Most fund management companies were established from 2006 to 2008, when Vietnam had a boom in its stock market. However, the majority of the companies are small and only five of them have billions of dong in chartered capital.

According to Dau Tu Chung Khoan, the companies can be divided into five groups.

First are the fund management companies belonging to big financial institutions like banks or insurance companies. The companies of this group account for a large proportion in the total 48 licensed fund management companies. The commonality between the companies is that they can get financial support and acquire management experience from the “parent” groups.

The second group is comprised of fund management joint ventures. These include VFM, a joint venture between Dragon Capital and Vietnam’s Sacombank; a joint venture between Vietcombank and Franklin Templeton Ltd; Vietnam Partner, a joint venture between Vietnam’s BIDV Bank and an US partner.

The global management experience plus local understanding have helped the joint ventures operate well. The companies that fit into this group all can raise big funds.

The third group includes the fund management companies belonging to non-financial joint stock corporations or state-owned general corporations. The companies were mostly set up in the “golden age” of the stock market, when big corporations tried to expand their business by jumping into the finance sector.

These companies still cannot raise large funds, they only have small impacts on the market, and many of them have been operating at a moderate level. In a particular case, the founding shareholders of Sabeco management company is considering selling the subsidiary. In 2009, the Vietnam Industry and Energy Fund Management Company was dissolved.

The fourth group includes dynamic companies which belong to securities companies or have big shareholders who are also big entities.

The fifth group includes the remaining companies whose characteristics are the mixture of different groups, but no characteristic is dominant. Most of the companies have been quiet because they cannot raise funds.

What are they doing?

Besides the three companies which manage public funds and list funds’ certificates on the bourses, most of the other types of funds have been following “secret tracks”.

There are two reasons behind this.

First, close funds are not responsible for exposing information to the open public. They just have to submit periodic reports to state management agencies.

Second, many companies have been operating at moderate level, and they do not have a demand to polish their image.

According to Nguyen Thanh Long, Deputy Director of the Fund Management Department under the State Securities Commission (SSC), only 13 out of the 48 licensed management companies have successfully called for funds and set up funds.

However, Long stressed that this does not mean that the other 35 funds are paralyzed: they are providing different kinds of services, such as consultancy, carrying out authorized contracts or managing investment portfolios.

Fund management companies prove to be smaller than securities companies, which are considered their “brothers”, in the operation. However, according to SSC, though the companies do not prosper, they are not suffering from big difficulties like securities companies. SSC’s viewpoint is that the market will decide the existence of the fund management companies.

However, analysts have pointed out that many such companies are “living well” thanks to many kinds of services, including unlicensed services. The companies belonging to banks have been earning money with the service of capital arrangement. Other companies undertake authorized contracts and investment portfolio management. Most of them have been trying to exist long enough to wait for the new boom of the “bullish” market.

Source: DTCK