chapter 6 SECURITIES INVESTMENT FUND

Chapter Securities investment fund 06/08/2011 B02003 - Securities Investment Fund Chapter 6: Securities Investment Fund • 6.1 Definition • 6.2 Categories • 6.3 Activities of Securities Investment Fund 06/08/2011 B02003 - Securities Investment Fund 6.1 Definition • Definition • Benefits • Participants 06/08/2011 B02003 - Securities Investment Fund Definition • Securities investment fund means a fund established from capital contributions by investors with the objective of making profits by investing insecurities whereby the investors not have day-to-day control over the investment decision making of the fund 06/08/2011 B02003 - Securities Investment Fund Benefits of investment via Fund • For investors: Diversify investment lists and minimize risks Manage investment professionally Save trading costs 06/08/2011 B02003 - Securities Investment Fund Benefits of investment via Fund • For enterprises using the fund:  Have chance to attract the fund at lower costs when borrowing via banking system  Preserve their autonomy in business operations without being governed as major shareholders of the enterprise because investment into enterprises via investment fund is limited 06/08/2011 B02003 - Securities Investment Fund Participants • The fund management company • The supervisor bank • Investors 06/08/2011 B02003 - Securities Investment Fund The fund management company • The fund management company manages the stock investment fund • The company is established under the operating license issued by State Securities Commission and is organized as a joint stock company or a limited company with the minimum legal capital of 25 billion VND • During the time of operation, the fund management company is able to set up and manage many fund simultaneously 06/08/2011 B02003 - Securities Investment Fund The fund management company • The fund management company can carry out the following professional competences: – Investment fund management (mobilizing, managing the capital and assets, managing portfolio) – Investment consultant and financial consultant – Analysis services which support 06/08/2011 B02003 - Securities Investment Fund investment The supervisor bank: • The supervisor bank maintains and deposits assets of securities investment fund and supervises the fund management company to ensure benefits of investors • To be a supervisor bank, it is necessary to be a commercial bank which operates legally in Vietnam and is issued the depository license by State Securities Commission Vietnam 06/08/2011 B02003 - Securities Investment Fund Based on the methods of organizing Company-formed investment fund Trust-formed investment fund The fund is considered as the legal entity and shareholder who contributes money to elect Fund Board of Directors is not considered as the legal entity but capital common fund of investors Fund Board of Directors hire the fund management company and supervisor bank Fund Board of Directors supervises operations of these organizations Investors share capital to hire a professor to manage the profitable investment fund The fund management company appoints its staff to run and use the capital of fund to invest into securities or other profitable assets The fund management company uses the capital to invest into profitable areas effectively The supervisor bank plays roles in The supervisor bank supervises maintaining assets, exchanging operations of the fund management securities for the fund when executing company, preserving capital and assets 06/08/2011 B02003 - Securities Investment transactions of investors Fund 6.3 Activities of investment fund 6.3.1 Activities of mobilizing capital/ raising fund 6.3.2 Investment activities 06/08/2011 B02003 - Securities Investment Fund 6.3.1 Activities of raising fund of investment fund • Mode of issuing • Fixed issuing price • Valuate issuing price 06/08/2011 B02003 - Securities Investment Fund Modes of issuing • Company investment fund: issuing shares to raise capital • Contract investment fund: the amount of anticipated capital to establish the fund is divided into units and the fund will issue the fund certificate 06/08/2011 B02003 - Securities Investment Fund Valuate issuing price • • • • Net asset value of the fund (NAV) Value of certificate of fund Load of fund certificate Offering price of fund certificate 06/08/2011 B02003 - Securities Investment Fund Net asset value of the fund • NAV = The amount of asset value and investments of the fund – debts must be paid 06/08/2011 B02003 - Securities Investment Fund Valuation of issuance • • • • Net asset value of the fund Fund certificate value Load of fund certificate Offering price of fund certificate 06/08/2011 B02003 - Securities Investment Fund Fund’s certificate value • The value of each fund certificate/share of the investment fund = NAV / the amount of current certificates( shares) 06/08/2011 B02003 - Securities Investment Fund Load of fund certificate • Load of fund certificate is the percentage of the gap between Public Offered Price and NAV Load 06/08/2011 POP-NAV = x 100% POP B02003 - Securities Investment Fund Offering price of fund certificate • Offering price of fund certificate is calculated as follow: POP = NAV/(100% - offering for sale cost ) 06/08/2011 B02003 - Securities Investment Fund 6.3.2 Investment activities • Fee and cost of investment fund • Investment process 06/08/2011 B02003 - Securities Investment Fund Fee and cost of investment fund • Fees which investors pay when participating and when drawing money from the fund • Direct fees on the fund 06/08/2011 B02003 - Securities Investment Fund Fees which investors pay when participating and when drawing money from the fund • Issuing fee • Repayment fee 06/08/2011 B02003 - Securities Investment Fund Direct expense on the fund • • • • • • • • • Annual management cost Awards and incentives Costs of the Board of representative of the fund Supervision and deposit costs Service costs for investors Auditing cost Pricing cost Loan fee Other fees (establishment fee, legal fee, brokerage fee, etc…) • Tax 06/08/2011 B02003 - Securities Investment Fund Investment process • Identify targets and strategies of investment • Establish the structure of investment portfolio in accordance with targets and strategies • Inspect and research markets • Adjust investment portfolio 06/08/2011 B02003 - Securities Investment Fund .. .Chapter 6: Securities Investment Fund • 6. 1 Definition • 6. 2 Categories • 6. 3 Activities of Securities Investment Fund 06/ 08/2011 B02003 - Securities Investment Fund 6. 1 Definition... investment fund 6. 3.1 Activities of mobilizing capital/ raising fund 6. 3.2 Investment activities 06/ 08/2011 B02003 - Securities Investment Fund 6. 3.1 Activities of raising fund of investment fund •... Securities Investment Fund 6. 3.2 Investment activities • Fee and cost of investment fund • Investment process 06/ 08/2011 B02003 - Securities Investment Fund Fee and cost of investment fund • Fees