Some investment fund management companies have been moving ahead with their plan to set up open end funds. However, observers believe that they would not hurry to establish open end funds at any costs, because they understand that a lot of big difficulties are still waiting ahead.
Vietstock, a financial website reported that VMFVFA’s extraordinary investors’ meeting on December 5 approved the plan to transfer the current close end fund to an open end fund
At first, the fund management company would follow necessary procedures to delist the fund certificate from the HCM City Stock Exchange (HOSE) and cancel the deposit registration. It is expected that the last trading session of VFMVFA would be the one of March 8, 2013.
After that, VFMVFA would become operational as an open end fund. VFMVFA’s open fund certificates would come back for transactions again on April 12, 2013.
According to Tran Le Minh, Deputy General Director of VFMVFA, the fund now has the chartered capital of over 240 billion dong. The net asset value (NAV) of the fund had dropped to 166.4 billion dong by November 30, while 69.4 percent of which was in cash and 31 percent in the stocks listed at HOSE. The portfolio can be easily converted into cash within four or five trade transactions because of the high liquidity of the stocks the fund is holding.
On December 5, VFMVFA fund certificate was traded at 5800 dong.
If everything goes smoothly as planned, VFMVFA would be the first open end fund specializing in trading shares. Some other investment funds are also moving ahead to prepare for the shifting into open funds or setting up new open funds.
Vietstock has reported that Vinawealth fund management company and MB Capital would set up bond investment funds under the mode of open end funds this December.
To date, investors and management companies can see which path they should follow to set up open end funds, since the legal framework on the establishment of the funds and their operation management has been set up.
However, analysts believe that a lot of problems would still arise during their “itinerary.” If noting that investors have been waiting for two years so far to prepare for the establishment of their open end funds, one would understand how it is difficult to go on the path.
It took the Ministry of Finance a long time to compile necessary legal documents to pave the way for the establishment of open end funds. The Circular No. 183 on the matter was only issued late last year.
And though the legal documents have been promulgated, no considerable progress has been made over the last year, except the preparation works.
Dau tu chung khoan has quoted an official of the finance ministry as saying that no investment incentives for open end funds have been announced. Meanwhile, in principle, in order to encourage open end funds in the first phase of operation, it is necessary to offer a lot of incentives.
Nguyen Van Phung, Deputy Director of the Tax Policy Department under the Ministry of Finance, told the press that it is very difficult to find out the way to offer tax incentives to open end funds.
The policy maker cannot offer the incentives which exceed the currently applied incentive frame offered to investors.