Fund management market accounts for 5 per cent of GDP

The total value of assets under management of fund management companies accounts for only 5.5 per cent of Việt Nam's GDP, still modest compared to some countries in the region such as Thailand at 38 per cent and Malaysia at 50 per cent. VNA/VNS Photo

The scale of the fund management market accounts for around 5 per cent of GDP, thus there is still much growth potential in 2022.

This means the total value of assets under the management of fund management is still modest compared to some countries in the region such as Thailand at 38 per cent and Malaysia at 50 per cent.

By 2030, the scale of the fund management market is forecast to reach 6-10 per cent of GDP.

Since the inception of the first fund management company in 2003, the number of investment funds has increased sharply to 70 funds.

The legal framework for the operation of fund management companies and investment funds has been continuously improved along with new types of funds such as open-ended funds, ETFs and real estate funds.

According to many experts, fund management and asset management activities in developed countries have become an effective investment channel and contribute to the sustainable development of the stock market. They said investing through the funds reduced risks for investors.

At the Phố Tài Chính (Financial Street) Talkshow programme, Nguyễn Quang Long, deputy director of the Fund Management Department under the State Securities Commission (SSC) said that the total value of assets under the management of fund management companies in Việt Nam reached approximately VNĐ570 trillion (US$24.7 billion) as of December 31, 2021.

From 2015 to the end of 2021, on average each year, the scale grew about 15- 25 per cent. Particularly in 2021, this market grew beyond the average threshold and reached 31 per cent.

Currently, there are 43 active fund management companies. The market has 70 securities investment funds and in 2021 alone, 14 funds were established. The total initial mobilised capital of these 14 funds was VNĐ1.5 trillion.

Long attributed this development to two elements. The first was that the fund management companies themselves had enhanced management and human resources capacity.

Second, banks’ lowering interest rates was the driving force for the fund management market and fund management companies to have a stronger development market.

Nguyễn Phan Dũng, deputy general director of SSI Fund Management Company (SSIAM), said that in 2021, the stock market flourished along with the growth of funds. The permission to establish open-ended funds and ETFs on the market has met the needs of the market.

“Each person only has enough time and knowledge to study about five to seven stocks, or a maximum 15 stocks. When participating in the stock market and for long-term benefits, it is preferable to invest in medium and long-term channels such as buying fund certificates,” he said.

“In stock markets in the Asian region, investors tend to participate directly in buying and selling inpidual stocks. However, in the European - American markets, besides participating in self-trading, the majority of investors also plan to allocate part of their investment portfolios to securities investment funds.

“Việt Nam will follow the trend of investing in reputable funds to reduce risks. Việt Nam's middle class will increase sharply in the next 10 years, possibly up to 30 million people. When the economy develops to a new level, financial planning for inpiduals and families will receive more attention.

“In the history of the world fund management market, there have been cases where fund management companies went bankrupt and investors lost all their money. However, current legal regulations are strict in separating assets of fund management companies and those of investors. All assets must be deposited at a bank. These assets are monitored by a custodian bank. Therefore, in case a fund management company is at risk of bankruptcy, the investors' assets are still ensured,” he said.

Dũng said that the profit ratio was important. Fund management companies must continue to improve this ratio towards a more sustainable direction. Digital transformation using online tools is also a trend and training for investors must be focused on.

“Việt Nam now has a relatively wide range of products. However, in each segment, there is still large room to develop such as with open-ended funds, ETFs or pension funds,” he said. — VNS