Vietnam's fund industry seeks path to sustainable growth

The panel, titled 'The Fund Industry in a New Era: Unlocking Capital Flows for High and Sustainable Growth', took place on September 22.

The speakers for the panel discussion. Photo: Chi Cuong

Nguyen Thi Hang Nga, general director of Vietcombank Fund Management (VCBF). Photo: Duc Thanh

From the perspective of a fund management company, Nguyen Thi Hang Nga, general director of Vietcombank Fund Management (VCBF), said, “There are comprehensive fund products across the basic categories in Vietnam. The market has developed a range of traditional products, from equity, bond, and balanced funds to money market funds.”

She further noted, “There remains a significant gap between the number of people directly participating in the stock market and those investing through open-ended funds. While the market has approximately 13 million securities accounts, the number of investors participating in open-ended funds is only slightly above 700,000.”

She pointed out that investors may not know about, understand, or fully trust fund products. Thus, it is vital to help investors gain insights into available products.

Nguyen Nghia Tuan, deputy CEO of SSIAM. Photo: Chi Cuong

Nguyen Nghia Tuan, deputy CEO of SSI Asset Management Co., Ltd. (SSIAM), said, “We need to identify the current stage of the market. Thus, we can decide to develop new products or continue to refine existing ones. In Vietnam, most household savings remain concentrated in two familiar channels, including bank deposits and real estate. Capital flowing into the fund industry is still at an early stage.”

He said, “The fund industry needs an appropriate roadmap. First, the industry should continue to optimise existing products while designing new products tailored to the demands of each investor group.”

Another key focus area is developing an integrated and reliable data system. Such infrastructure would help standardise processes, improve connectivity, reduce operating costs, and enhance efficiency across the fund industry ecosystem, according to Tuan.

Ngo Thuy Linh, chairwoman of BOD at SmartInvest Securities JSC. Photo: Chi Cuong

Ngo Thuy Linh, chairwoman of BOD at SmartInvest Securities, said, "A major barrier lies in the perception of Vietnamese people towards investing. The long-term investment performance of open-ended funds is viewed positively compared with compared to individual investors trading on their own. However, many customers regard securities primarily as a short-term investment channel for idle money.”

By contrast, much of their long-term capital is allocated to real estate because of a preference for tangible assets and the greater sense of security associated with holding them.

Amidst the slowdown in real estate, Linh believes this could also be an appropriate time to adjust the approach to customers – from selling individual products to providing advice on wealth management and multi-asset allocation.

Bui Van Huy, general director of FIDT Investment Consulting and Asset Management JSC. Photo: Duc Thanh

Bui Van Huy, general director of FIDT Investment Consulting and Asset Management, said, “It is vital to improve financial literacy to channel long-term capital into the fund industry. Vietnamese people earn a living and spend money before investment. This mindset should be gradually shifted to investment and accumulation before spending.”

Huy proposed that over the next 12–18 months, Vietnam should develop a legal framework for wealth management, including legal definitions and competency standardisation for wealth management advisory teams. International professional certifications such as the Certified Financial Planner (CFP) could serve as a reference.

“Families are the basic cells of society. When each family has healthy finances and makes sound financial decisions, the country's economy will clearly develop accordingly,” Huy said, emphasising that when a long-term financial mindset is established, investment capital can also shift towards a more sustainable direction.

Duong Ngoc Tuan, deputy general director of the VSDC. Photo: Chi Cuong

Duong Ngoc Tuan, deputy general director of the VSDC, said, “Fund services are viewed as an integral part of the infrastructure supporting the growth of the fund industry.

VSDC’s approach is guided by two key objectives. First, to develop fund services as an infrastructure platform capable of supporting market expansion. Second, to prepare the infrastructure to accommodate new products and evolving demands as the market grows.”

Tuan explained the importance of preparing infrastructure in advance to keep pace with the growth of the industry. As the number of investors and products continues to rise, there will be rising demands on systems for custody, registration, and distribution as well as on connected market participants.

Nguyen Thi Bich Nga, deputy head of the Division for Management of Fund Management Companies and Securities Investment Funds under the SSC. Photo: Chi Cuong

From the policy perspective, Nguyen Thi Bich Nga, deputy head of the Division for Management of Fund Management Companies and Securities Investment Funds under the State Securities Commission (SSC), said, “The fund industry acts as a bridge between public savings and the economy's investment capital needs. The industry also plays a vital role in connecting public savings with the capital required for business investment expansion. Through professional management institutions, capital can also be more effectively allocated to priority sectors such as infrastructure and innovation.”

She identified three policy priorities for the fund industry, including product diversification, enhancing transparency to bolster investor confidence, and formulating incentive policies while expanding distribution channels for fund products.

Regarding the attraction of foreign capital into fund certificates, she noted that, “Securities regulations do not impose limits on foreign ownership of these certificates. The more critical issue lies in creating products compelling enough to attract international investors.”

Nguyen Hai Binh, head of Client Management, Securities Services at HSBC Vietnam. Photo: Chi Cuong

Nguyen Hai Binh, head of Client Management, Securities Services at HSBC Vietnam, said, “The upgrade of the Vietnamese stock market to 'secondary emerging market' status opens up opportunities to attract significant capital inflows. However, active capital flows from global funds or sovereign wealth funds are highly selective.”

“Therefore, to successfully attract this capital, Vietnamese fund management companies need to enhance their capabilities in two key areas,” Binh said. “First is the ability to mobilise capital and generate sustainable, long-term investment performance. Second is the establishment of governance and operational frameworks that meet international standards, encompassing risk management, NAV valuation, liquidity management, custody services, and independent auditing.”

In the short term, priority should be given to distribution. Accordingly, the legal framework needs to be further refined to expand distribution channels for fund certificates.

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