Vietnam Active Investment Fund (VFA) will be the first closed-end fund in Vietnam to be turned into an open-end one as approved by all the investors, who are holding 93.1% of fund certificates, present at an extraordinary meeting on Wednesday.
VFA is run by VietFund Management Co. (VFM). The fund model is changed to increase its liquidity, according to the fund board of representatives.
Giving further explanation, the representative board said that though VFA had been listed on bourse, the matched trading volume was very poor, only about 2,000 fund certificates per day. Moreover, due to its little appeal for investors, the discount rate of VFA is now 40-50% of the net asset value (NAV), meaning market prices of fund certificates traded every day are much lower than NAV.
The representative board hoped that after VFA becomes an open-end fund, the flexibility in trading would increase the liquidity of fund certificates. In particular, investors would be able to make direct transactions with the fund management company.
Besides, discount rate will be no longer applicable. As such, investors can trade at NAV, so their interests will be better guaranteed.
When turned into an open-end fund, VFA will create favorable conditions for investors to inject more money into it, whereas investors in the closed-end fund can only trade fund certificates on bourse, not generating capital for the fund.
VFA will cancel listing of fund certificates and depository. In addition, it will propose the State Securities Commission revise the certificate for establishment of an open-end fund.
It is expected that the last transaction date of VFA as a closed-end fund will be March 8, 2013 and the first transaction date after it is turned into an open-end fund will be April 12, 2013.
VFM suggested the fund only hold cash from the day of temporary suspension to the day when the new fund is opened. Another option is the fund will hold 70% cash and 30% NAV for the VN30 basket.
At the meeting on Wednesday, investors chose the first option, converting all shares into cash. As such, in the coming time, VFA will sell many shares it is holding, mostly MBB, VNM and VIC.
According to the audited financial statement of VFA, as of September 30, its total asset had fallen 1.86% against the year’s beginning to VND169.2 billion, including VND119.7 billion worth of cash and cash equivalents and VND48.5 billion of shares.
The accumulated loss had reached VND74.2 billion by the end of September, while the total net asset value stood at VND166.3 billion on September 30.
The Saigon Times Daily