VietNamNet Bridge - Vinawealth and MB Capital Vietnam investment funds began operating in mid-December, with minimum capital of VND50 billion ($2.5 million). The two funds are supervised by HSBC.



The State Securities Commission has permitted two investment funds of Bao Thinh Vinawealth (VFF) and MB Capital Vietnam (MBBF) to offer investment fund certificates to the public. They are the first two open-end funds in Vietnam and will be supervised by the HSBC Vietnam.

MB Capital Vietnam fund, under the MB Fund Management Company (MB Capital), will focus primarily on government bonds, corporate bonds with payment guarantee, cash and other assets. This fund is expected to raise at least VND50 billion from domestic investors and the remaining 40 percent from foreign investors.

Bao Thinh Vinawealth plans to launch advertising campaign in early 2013. Its objective is mobilizing VND50 billion of capital. In its investment portfolio, this fund is expected to focus 50-100 percent of the capital in government bonds, bonds guaranteed by the Government, to invest 0-5% in corporate bonds, money market tools, valuable papers...

In addition to these first open-end funds, in the coming time, the Vietnam Active Fund (VFMVFA) will also close to become an open-end fund. VFMVFA certificate will be officially ceased from trading on the Ho Chi Minh City stock market on March 8, 2013 and will be back to work again on December 4, 2013.

Closed-end fund is the issue of a single certificate when conducted in raising capital for, and do not buy back stock, as investors wishing to sell again. After the end of raising capital (concurrent), the certificates will be listed on the stock market. Investors can buy or sell for capital recovery through the secondary market. The total mobilized capital regulation did not change during the operation time.

The scale has a total margin on each trading day. Investors are entitled to the certificate provided for under the net value at the time of transaction. Transactions are made directly with the fund management company; the certificate shall not be listed on the stock market.

Closed-end funds are mutual funds with a fixed number of shares. Unlike open-end funds, new shares/units are not created by managers, to meet demand from investors, but the shares can only be purchased (and sold) in the market. This is the original design of mutual fund which pre-dates open-end mutual funds but offers the same actively managed pooled investments.

Closed-end funds are usually listed on a recognized stock exchange and can be bought and sold on that exchange. The price per share is determined by the market and is usually different from the underlying value or net asset value (NAV) per share of the investments held by the fund. The price is said to be at a discount or premium to the NAV when it is below or above the NAV, respectively.

An open-end fund is a collective investment scheme which can issue and redeem shares at any time. An investor will generally purchase shares in the fund directly from the fund itself rather than from the existing shareholders. It contrasts with a closed-end fund, which typically issues all the shares it will issue at the outset, with such shares usually being tradable between investors thereafter.

Compiled by S. Tung