Classifying securities investment funds according to capital mobilization methods and management rights, securities investment funds are divided into two types: public funds and member f
Trang 1TRUONG DAI HOC NGAN HANG TP HO CHi MINH
KHOA LUAT KINH TE
HOCHIMINH UNIVERSITY OF BANKING
MON: LUAT CHUNG KHOAN
Giảng viên hướng dẫn: PGS.TS Viên Thế Giang
Sinh viên thực hiện: Nhóm Š
Lớp: D01
DANH SÁCH NHÓM 5
5 Nguyễn Hồng Nhung 030737210126
7 Huynh Tran Thi Thu Thuận 030737210158
Trang 2
MUC LUC
1 Overview of stock investment funds
1.1 Concept, roles
1.1.1 Concept
1.1.2 Roles
1.2 Classification of securities investment funds
1.2.1 Classifying securities investment funds according to capital mobilization
methods and management rights, securities investment funds are divided into two types: public funds and member funds
1.2.2 Based on capital structure, stock investment funds are divided into two
types: closed-end investment funds and open-ended investment funds
1.2.3 Based on the organizational structure and operation of the investment fund,
it is divided into investment funds in the form of companies and investment funds
in the form of contracts
1.2.4 Based on the purpose of the fund's operation, investment funds are divided
into exchange-traded funds and real estate investment funds
II The reason is that there have not been many securities investment funds established
in Vietnam
2.1.Current situation of securities investment funds established in Vietnam today
2.2 The reason is that there have not been many securities investment funds
established in Vietnam
2.2.1, The stock market is still young, volatile: Vietnam's stock market is still young
2.2.2 Why there is a lack of open markets
2.2.3 Legal and regulatory restrictions
2.2.4 Lack of knowledge and experience
II] Proposing solutions to improve the efficiency of establishing many securities
investment funds in Vietnam
3.1 International relations
Trang 33.2 Solutions to improve the efficiency of establishing many securities investment funds in Vietnam today
Trang 4FIND OUT THE REASON WHY THERE ARE NOT MANY
SECURITIES INVESTMENT FUNDS ESTABLISHED IN
VIETNAM
Il Overview of stock investment funds
1.1 Concept, roles
1.1.1 Concept
According to the provisions of Clause 37, Article 4 of the Securities Law 2019: "A securities investment fund is a fund established through capital contribution by investors to make investment in securities or other assets, including real estate Investors do not have the right to daily control the investment decisions of the fund"
1.1.2 Roles
The securities investment fund model plays an important role in the stock market, is
an effective channel to attract investment and contributes to increasing liquidity in the market This is expressed in many aspects:
- In macro terms, the activities of securities investment funds contribute to increasing liquidity for the stock market, thereby promoting the development of the capital market, especially attracting capital from foreign investors
- For securities investors, when making securities investment through securities investment funds, they will:
+ Benefit from the knowledge and experience of an investment management company
—a professional stock investor
+ There are many investment choices with relatively small amounts, meaning that the greater the diversification in investments, the lower the nsk
+ Help investors penetrate a number of industries, the investment sector is highly profitable but the stock price trades large that an individual or small investor is unlikely to enter
+ Save investment costs
+ Ensure operational transparency
1.2 Classification of securities investment funds
Trang 51.2.1 Classifying securities investment funds according to capital mobilization methods and management rights, securities investment funds are divided into two types: public funds and member funds
According to Clause 38, Article 4 of the 2019 securities law stipulates: " A public fund 1s a securities investment fund that publicly offers fund certificates."
The fund's capital is mobilized through the issuance of fund certificates to the public With a public fund, investors do not have day-to-day control over the fund's investment decisions Investors can be individuals or legal entities, but most are individual investors Public funds provide small investors with investment vehicles that ensure investment diversification, reduced risk and low investment costs
According to Clause 41, Article 4 of the Securities Law 2019, it is stipulated: "A private fund means a securities investment fund that has 02 - 99 capital contributors who are all professional investors."
Member funds raise capital by private placement to a small group of investors Due to the nature of the fund, the liquidity will be lower than that of a public fund Investors in private funds often have large amounts of capital And in return they can participate in controlling the fund's investments
1.2.2 Based on capital structure, stock investment funds are divided into two types: closed-end investment funds and open-ended investment funds
According to Clause 40, Article 4 of the 2019 Securities Law, it is stipulated: " A closed fund is a public fund whose fund certificates have been offered to the public
and cannot be redeemed at the request of investors."
Issued once, through the process of raising capital for the round and does not buy back
shares or investment certificates when investors need to resell This form is to help mobilize capital, the certificates will be listed on the stock market
According to Clause 39, Article 4 of the Securities Law 2019, it is stipulated: " An
open-end fund is a public fund whose publicly offered fund certificates have to be redeemed at the request of the investors."
After the initial public offering, investors' buy/sell transactions are carried out
periodically based on net asset value This transaction is performed directly with the fund management company or at designated agents
Trang 61.2.3 Based on the organizational structure and operation of the investment fund, it is divided into investment funds in the form of companies and investment funds in the form of contracts
A company-type investment fund is a legal entity, a company formed im accordance with the laws of each country
In this model, the fund management company acts as an investment consultant, responsible for conducting investment analysis, managing investment portfolios and
performing other business administration tasks
Unlike the investment fund model in the form of a company, the model of an investment fund in the form of a contract 1s not a legal entity Investors are those who
contribute capital to the fund and entrust the investment to the fund management
company to ensure the highest profitability from their contributed capital This is an investment trust model
1.2.4 Based on the purpose of the fund's operation, investment funds are divided into exchange-traded funds and real estate investment funds
An exchange-traded fund 1s an open fund formed by receiving and exchanging a portfolio of structured securities for fund certificates Exchange-traded fund certificates are listed and traded on the trading system for listed securities
Real estate investment fund means a securities investment fund of an issuer that is a real estate business organization with revenue from ownership, and real estate business is at least 65% of total revenue calculated on the most recent financial statement
II The reason is that there have not been many securities investment funds established
in Vietnam
2.1.Current situation of securities investment funds established in Vietnam today
Legal framework for investment fund operations in Vietnam
An investment fund is an intermediary financial institution, operating in the market
and governed by law to ensure the health of the investment fund's existence, operation
and development, as well as ensuring the health of the investment fund protect the
Trang 7interests of the investing public In Vietnam, investment fund operations are governed
by the Securities Law and by-law documents such as: Decree No 155/2020/ND-CP of the Government detailing the implementation of a number of articles of the Law Stock; Circular No 98/2020/TT-BTC of the Ministry of Finance guiding the operation and management of securities investment funds; Circular No 99/2020/TT-BTC
guiding the operations of securities investment fund management companies
Current status of investment funds in Vietnam
Data from the State Securities Commission shows that, as of November 2022, the State Securities Commission has licensed the establishment of 23 new investment
funds and licensed public offerings to 4 investment funds , bringing the total number
of licensed funds in Vietnam operating in the market to 87 funds, including: 48 open
funds, 11 ETF funds, 01 real estate fund, 02 closed funds and 25 member funds The total net asset value of securities investment funds as of October 2022 reached more than 73.4 trillion VND
By the end of 2022, there are 44 fund management companies i operation with the total value of assets under management at the most recent time (November 2022) estimated at 546 trillion VND, down 9% compared to the previous year at the end of
2021 However, the business activities of fund management companies are still maintained normally and profitable, many companies have mobilized to establish new securities investment funds, thereby contributing to Stabilize and develop a healthy stock market with the leading role of institutional investors
Although the law allows commercial banks and insurance enterprises to distribute
fund certificates to take advantage of the extensive network of these organizations, but
in reality, the vast majority of fund certificate distribution 1s directly distributed through fund management companies and securities companies Meanwhile, the network of fund management companies and securities companies 1s mainly concentrated in large cities, leading to limited access to investors and the development
of fund product distribution networks; The quality of operations of fund management companies is uneven Some fund management companies operate stably and develop
well mainly due to the support of shareholders who are large financial institutions
such aS insurance companies, credit institutions, and securities companies For example, the insurance company's supported fund management company is Bao Viet Fund Management Company (BVF)
Reality in the world and the development process in Vietnam shows that open funds are the type of fund that accounts for the majority of investment funds on the market Open funds are also the foundation product for designing fund models that link the
stock market with other markets such as the insurance market and government bond
market In fact, in recent times, the business operations of fund management companies have developed in both breadth and depth, thus showing that securities investment fund management in Vietnam has matured rapidly and achieved many
Trang 8important milestones to contribute to the sustainable development of the Vietnamese
stock market
Assessing the current situation of securities investment funds in Vietnam:
Vietnam's securities investment funds have gradually asserted their position in the
stock market The contributions of securities investment funds to the development of
the economy in general and the stock market in particular are undeniable During the development process, securities investment funds have achieved certain results and contributions, which are:
- Although the trading value of fund certificates accounts for a very small proportion
compared to the total value of securities in the entire market, the continuous increase
in the trading value of fund certificates and the turnover speed over the years have contributed significantly Which shows the success of stock investment funds in building trust with the investing public
- The number of funds and trading scale of securities investment funds have changed a lot compared to the early stages when the stock market first came into operation
Some securities investment funds invest with high efficiency, affirming their position, name and reputation with investors such as Vietnam Securities Investment Fund
(VF1), Ban Viet Health Fund of Ban Viet Fund Management Company, VIEF Fund of Vietnam Industry and Energy Fund Management Company, FPT Fund of FPT Fund Management Company, MBC1 Fund of MB Fund Management Joint Stock Company and SSIMF Fund of the Company SSI Fund Management Company
- Securities investment funds have actively contributed to creating "demand" in SOE equitization programs, government bond and corporate bond issuance activities
Through the movement and trading behavior of stock investment funds, it contributes
to creating a new investment culture for inexperienced investors on the stock market
On the other hand, the increase in activities of securities investment funds, including
foreign securities investment funds, has contributed to improving the capacity and efficiency of State management according to the requirements of the market economy Setting new requirements as well as creating new tools and capabilities for State management in general and corporate governance in particular Corporate governance
has been made more serious and effective due to requirements on corporate financial reporting and transparency of information related to securities that businesses have
and will issue Consulting services, judicial support, credit rating determination,
insurance, accounting and market information must strive to mobilize and develop on the basis of international standards Since then, they have contributed Stronger
development of parts and overall Vietnamese financial market
However, some issues that need to be raised are:
- Number and type of activities of securities investment funds The number of
securities investment funds as well as the diversity of fund types 1s not commensurate with the size and development trend of the market In particular, there is a lack of
Trang 9open funds and specialized investment funds such as real estate funds and index funds
- these are considered key products that are popular and have many advantages in countries with a fund industry develop
- The ability of public funds to attract investors is low According to Tuoi Tre online
newspaper, for closed public funds such as fund certificates listed on the Ho Chi Minh City Stock Exchange, the market price of daily traded fund certificates 1s usually lower than the asset value Its net assets (NAV) range from 15%-40%, in some cases
up to nearly 50% discount This has greatly affected the psychology of investors in funds as well as the ability of fund management companies to mobilize capital to establish new funds
- Operational capacity of fund management companies The operating capacity of Vietnam's fund management companies is assessed to be uneven, and some
limitations still exist in the majority of fund management companies During their operations, most fund management companies still have inadequacies in implementing
risk management processes, market forecast research as well as the implementation of operations between departments In addition, the ability of fund management companies to mobilize and create funds is not high
2.2 The reason is that there have not been many securities investment funds established in Vietnam
In general, the situation of securities investment funds in our country has not
developed commensurate with the scale and development trend of the market, lack of
open markets the ability of public funds to attract investors is low, the operating
capacity of funds is uneven
And the causes of the above-mentioned conditions include:
2.2.1 The stock market is still young, volatile: Vietnam's stock market 1s still young (The stock fund was first introduced to the public in 2004), when the distance with the Departments in the region is still quite far In 2020, when the Covid-19 epidemic broke out worldwide, WHO declared the pandemic, Global stock markets have fallen rapidly and dramatically The epidemic situation can create uncertainty and anxiety in
the market, leading to sharp fluctuations in stock prices Many businesses may face
reduced sales and profits due to social distancing measures and restrictions on business operations This can affect the price of their shares in the stock market So,
making stock investors, especially hedge funds, feel the higher nsk of putting capital
into this unstable market
2.2.2 Why there is a lack of open markets:
Trang 10Because compared to closed-end securities investment funds, open-ended securities
investment funds have an unstable capital structure Because investors can withdraw capital anytime they want Because in closed-end investment funds, investors are not allowed to withdraw capital by reselling certificates to the fund and closed-end investment funds have a more stable capital structure because the fund does not return capital to investors by buying back investors' fund certificates when they need tt
2.2.3 Legal and regulatory restrictions:
Incomplete legal or regulatory restrictions may also make investment funds hesitant to
operate in Vietnam
In the process of developing Vietnam's stock market, The State has perfected the legal
provisions on the securities market to conform to social relations regulating the
operation of the securities market and International integration However, there are
some inadequacies in the law governing securities investment funds as follows:
a) Inadequacies of the current securities investment fund law
First, the Law on securities investment funds is still limited when there are no regulations guiding new types of funds such as: funds of funds, parent funds, subfunds, money market funds
Second, The law on securities investment funds has not diversified distribution channels for fund certificate, Individuals have not been allowed to participate in the
distribution of fund certificates and there are no regulations guiding distribution
agents to use financial technology in the distribution of fund certificates
Third, tax policy has not encouraged the development of securities investment funds, The fund's corporate income tax is not clearly regulated The tax rate of corporate Income, personal income when investing in fund certificates is higher than when Investing in other assets such as: bonds, deposits, while investors in stock investment funds are small, inexperienced investors
b) Inadequacies in law enforcement on securities investment funds
First, the process of offering and establishing investment funds is cumbersome and
complicated The process of offering and establishing investment funds lasts (30 days
The State Securities Commission and fund management companies have not coordinated in implementing online public services
Second, the General Meeting of investors of securities investment funds has many shortcomings Must be held annually once a year However, investors usually do not