The fund management market represents 5% of GDP | Business


The total value of assets under management of fund management Companies represent only 5.5% of Vietnam’s GDP, a figure that is still modest compared to some countries in the region. (Photo: VNA)

Hanoi (VNS/VNA) – The scale of the fund management market represents about 5% of GDP, so there is still a lot of growth potential in 2022.

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

By 2030, the size of the fund management market is expected to reach 6-10% of GDP.

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

The legal framework for the operation of fund management companies and investment funds has been continuously improved as well as new types of funds such as open 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 Exchange. They said investing in the funds reduces the risks for investors.

On the Pho Tai Chinh (Financial Street) Talkshow, Nguyen Quang Long, Deputy Director of the Fund Management Department of the State Securities Commission (SSC), said that the total value of assets under the management of fund management companies in Vietnam reached approximately 570 trillion VND (24.7 billion USD) as of December 31, 2021.

From 2015 to the end of 2021, on average each year, the scale has increased by approximately 15-25%. Particularly in 2021, this market exceeded the average threshold and reached 31%.

Currently, there are 43 active fund management companies. The market has 70 securities investment funds and in 2021 alone, 14 funds were created. The total initial capital raised from these 14 funds was VND 1.5 trillion.

Long attributed this development to two elements. The first was that the fund management companies themselves had strengthened management and human resource capacities.

Second, the decline in bank interest rates has been driving the fund management market and fund management companies to have a stronger development market.

Nguyen Phan Dung, deputy managing director of SSI Fund Management Company (SSIAM), said that in 2021, the stock market has flourished alongside fund growth. Permission to establish open-end funds and ETFs in the market has responded to market needs.

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

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

“Vietnam will follow the trend of investing in reputable funds to reduce risk. Vietnam’s middle class will grow sharply over the next 10 years, perhaps up to 30 million people. When the economy expands to a new level, financial planning for individuals and families will receive more attention.

“In the history of the global fund management market, there have been cases where fund management companies have gone bankrupt and investors have lost all their money. However, current legal regulations are strict in separating the assets of fund management companies from those of investors. All assets must be deposited in a bank. These assets are monitored by a custodian bank. Therefore, in the event of risk of bankruptcy of a fund management company, the assets of investors are always insured,” he said.

Dung said the profit rate is important. Fund management companies should continue to improve this ratio in a more sustainable direction. Digital transformation using online tools is also a trend and investor education should be prioritized.

“Vietnam now has a relatively wide range of products. However, in each segment there is still a lot of room for development, such as with open funds, ETFs or pension funds,” he said./.

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