Vietnam to launch first domestic ETF
14 July 2014
Category: News, Asia, Global, Vietnam
By Maya Ando
Vietnam’s first domestic ETF will be listed by VietFund Management (VFM), following an IPO set to take place between July 21 and August 14.
The VFMVN30 ETF will be managed by the fund's authorised participants, which include Ho Chi Minh Securities Corporation (HSC) and Bao Viet Securities Company (BVSC). VFM has appointed Standard Chartered Bank Vietnam as custodian, while the Vietnam Securities Depository will act as the fund’s transfer agent.
To launch the VFMVN30 ETF, VietFund has received support from the State Securities Commission, the Ho Chi Minh Stock Exchange (HOSE), and the Vietnam Security Depository in aspects including: co-operation in building the platform; investor education; training to brokers and investors; and fee support for their services to VFMVN30 ETF.
VFMVN30 ETF will track the performance of the VN30 Index, which is comprised of the 30 companies with the highest market cap and liquidity on the HOSE. In terms of portfolio, at least 95% of the fund’s assets will be invested in companies listed on the VN30, according to VFM.
Luong Thi My Hanh, deputy CEO, investment and research, VFM, told Asia Asset Management: “VN30 [represents] 60% of the VN Index market cap and 50% of the VN Index daily trading value, while two indices – the Market Vectors Vietnam and db x-trackers FTSE Vietnam UCITS – which are tracked by two offshore ETFs, represent 35% to 37% of the VN Index market cap and 35% to 40% of the VN Index daily trading value.”
ETFs are seen as beneficial within a portfolio as they offer diversification and low costs; and the Vietnam offering is positioned to attract investors looking to capitalise on the country’s commercial industry, which will likely see an acceleration in IPOs as the government increasingly privatises state-owned enterprises.
VFM said that it had been looking to launch the ETF product amid a bounce back in Vietnam’s stock market since 2012, as the economy recovered from high inflation, currency depreciation and bad debt.
Amid strong economic growth, Vietnam’s communist government is discussing the possibility of raising foreign ownership limits in domestic companies to 60% from their current limit of 49%.
VFM was established in 2003 as the country’s first asset management firm. It offers diversified fund products to local and international investors. It currently manages three equity funds and one bond fund, with total AUM of $95 million.