A. General concept of investment fund
1. General concept of investment fund
Securities investment fund means a fund formed from an investor's capital contribution with the purpose of making a profit from investing in securities or other forms of investment assets, including real estate, in which the investor does not have daily control over the fund's investment decisions.
Based on the size, manner and nature of capital contribution: securities investment funds are divided into two types, closed-end fund and open-ended fund.
- Close ended fund is a public fund whose fund certificates have been offered to the public and cannot be redeemed at the request of investors.
- Open ended fund (public fund) is a public fund whose fund certificates are offered to the public and must be redeemed at the request of investors.
Based on mobilized capital sources, investment funds are divided into two types: member fund and public investment fund.
- Member fund is a fund that mobilizes capital by issuing privately to a small group of investors, the number of capital contributors does not exceed thirty members and includes only members being legal entities.
- Public fund means a securities investment fund that conducts public offering of fund certificates.
Based on the structure and operation of the fund
- Investment fund of a company type: under this model, the investment fund is a legal entity, that is, a company formed under the provisions of the laws of each country.
- Contracted investment fund: all of the fund's business transactions are conducted by the QLQ company. The relationship between the investor and the management company is based on the control of the Trust Fund Management Council.
2. Closed-ended investment fund:
2.1. General concept:
The Fund closed the fund raising through issuing certificates one by one. Investors who cannot buy Fund certificates at the centralized issuance will only be able to buy back on the secondary stock market from current shareholders like trading stocks. The fund has nothing to do with these transactions. Therefore, closed fund is also called publicly-traded fund. In order to create liquidity for this type of fund, after raising capital (or closing the fund), fund certificates will be listed on the Stock Exchange or only traded on the non-stock market. focus on OTC (Over The Counter) and be traded just like common stock. Investors can buy or sell to recover their investment through the secondary market. Fund certificates may be traded lower or higher than the fund's net asset value (NAV). The closed-end fund has a stable capital structure, so it has the advantage of investing in long-term projects and low-liquidity securities. However, closed-ended VSCF certificates have low liquidity, so market prices are often low and the payback period is long.
2.2. Advantages of closed-end investment funds?
- Increasing profits for investors
- Closed-end investment funds may provide investors with optimal returns than open-ended funds
- Investors can buy or sell closed-end fund during the trading day
- Minimize investment costs due to the large size of funds.
- Investors' capital is managed by the professional and experienced investment professionals of a fund management company.
2.3. Operating closed funds
3. Membership funds and closed-end funds
|
Characteristics |
Quỹ đóng thành viên |
Quỹ đóng niêm yết |
|
Buy / sell CCQ |
Do not redeem investment certificates directly from investors when they wish to resell |
Do not redeem investment certificates directly from investors when they wish to resell |
|
Capital mobilization |
Released individually |
Widely released to the public. Listed on the Stock Exchange |
|
Investors |
Up to 30 capital contributors, and include only members who are legal entities |
At least one hundred investors, excluding professional stock investors |
|
Risk level |
Member funds carry out relatively risky investment activities, so they can bring about very high potential profits but also contain huge risks, which often the management company will not It is possible to use the Public Fund to invest for capital safety of investors |
Because public funds are mobilized from many investors, their investment activities must comply with many strict restrictions of the law. The fund management company that performs the management work must also comply with a lot of strict conditions in this fund management activity. Therefore, the profit may be lower than the member fund, and the risk is also lower. |
4. Some governed legal documents
- Securities Law No. 70/2006 / QH11 of the National Assembly, dated June 29, 2006, takes effect from January 1, 2007;
- Circular 212/2012 / TT-BTC dated 5/12/2012 guiding the establishment, organization and operation of the Fund Management Company;
- Circular 224/2012 / TT-BTC dated December 26, 2012 guiding the establishment and management of closed funds and member funds, takes effect from March 15, 2013, and replaces Decision No. 45/2007 / QD-BTC dated 5/6/2007 of the Ministry of Finance promulgating the Regulation on establishment and management of securities investment funds.
B. How does the open fund operate?
1. General concept of open fund
General concept: Open-end funds are public funds that fund certificates offered to the public must be redeemed at the request of investors.
This is a form of mutual fund (Mutual fund) where investors contribute money together to form the Fund to invest in different types of assets such as stocks, bonds, derivatives, etc. The form of open funds is very common in most developed countries and is increasingly spreading to developing countries, especially in Asia. After forming in the US in 1924, open fund formation began to be introduced in Malaysia, Singapore in 1959, South Korea in 1970, Thailand 1977 and China 1991.
Basically, the open-end Fund is not limited in terms of operating time, as well as the number of participating investors and the fund. The Fund is allowed to issue new shares continuously to increase capital, and is also willing to redeem fund certificates (CCQ) issued from investors periodically or at any time (due to the Fund's Charter. regulations). Accordingly, the additional or withdrawn capital amount will be issued or the number of CCQs will be decreased. In this way of operation, there is never an oversupply or demand for open-end fund certificates, and they must always reflect the value of the underlying assets. That is, the opening price of CCQ is equal to the fund's net asset value (NAV), calculated by dividing the fund's total assets after subtracting debts from outstanding shares.
NAV = (Total assets - Total debt) / (number of outstanding shares)
Why invest in open funds?
- Professional investment management
One of the main benefits of investing in open funds is that the investor's funds will be professionally managed by fund management companies. These companies with a deep understanding of the field of investment, working regularly with the market, and extensive relationships and sources of information can make accurate, efficient and economical investment decisions. Costs more than individual investors.
- Diversification
Another important factor in investment is asset allocation. This significantly contributes to the success of the portfolio by minimizing the non-systematic risk of each portfolio asset. While individual investors are limited in financial resources, it is difficult to do this, funds with great financial potential can easily diversify their portfolios with the optimal proportion for each. asset type to minimize investment risk.
- In accordance with the financial capacity of the investor
Open-end funds are public funds, so the minimum amount of capital required to contribute to the fund is usually reasonable and reasonable so that most small investors wishing to invest in the fund can participate.
- Liquidity
In case of necessity, investors may withdraw part or all of the money invested in the open fund, the fund management company is responsible for redeeming the fund certificates with the transaction price equal to the NAV value per fund unit.
- transparent
The Fund is strictly supervised by the State Securities Commission, Board of Representatives, supervisory banks and reputable auditing companies.
Open-end investment assets must also be frequently and continuously traded in the market, which will contribute to the transparency and clarity of the value of the Fund Unit.
Information regarding the net assets of open funds is always publicly and regularly disclosed on the fund management company's website, or CCQ distribution agents.
2. Some characteristics of the Open Fund
|
Đặc điểm |
Quỹ mở |
Quỹ đóng niêm yết |
|
Thanh khoản của các khoản đầu tư |
Tài sản của quỹ mở thanh khoản cao hơn so với quỹ đóng niêm yết bởi Quỹ chỉ đầu tư vào cổ phiếu, trái phiếu niêm yết hoặc chuẩn bị niêm yết. |
Thanh khoản của tài sản thấp hơn do quỹ bên cạnh đầu tư vào các chứng khoán niêm yết, còn có thể đầu tư vào các chứng khoán chưa niêm yết OTC |
|
Tỷ lệ nắm giữ tiền mặt |
Quỹ luôn để một khoản dự trữ bằng tiền mặt để đáp ứng việc mua lại CCQ |
Tỷ lệ giữ tiền mặt tương đối thấp, tuy nhiên về lý thuyết Quỹ có thể đầu tư toàn bộtiền mặt của quỹ |
|
Giá giao dịch |
Giá CCQ được xác định dựa trên giá trị tài sản ròng NAV/CCQ. |
Giá CCQ được xác định dựa trên nhu cầu mua và bán trên thị trường. Do vậy, giá có thể cao hơn hoặc thấp hơn đáng kể so với giá trị tài sản ròng (NAV). |
|
Thanh khoản CCQ |
CCQ được mua/bán lại trực tiếp với Công ty quản lý quỹ theo định kỳ hoặc tại các thời điểm (được quy định trong Điều lệ của quỹ) |
CCQ được niêm yết và giao dịch trên sàn chứng khoán |
|
Sự thay đổi quy mô quỹ |
Quy mô của Quỹ thay đổi liên tục theo yêu cầu mua vào hoặc bán ra của nhà đầu tư |
Quy mô quỹ vẫn giữ nguyên cho đến ngày đáo hạn (trừ khi tăng vốn) |
3. Operation mechanism of the open fund
- Fund management company: directly implements open-ended fund management, setting investment objectives, strategies, policies and implementing investment according to the goals approved by the General Meeting of Investors.
- SSC: is the direct management agency of the Fund Management Company, which is responsible for overseeing all activities of the QLQ Company, along with the investment funds of the company.
- Fund Representative Board: Selected by General Meeting of Investors, regularly supervising the Fund's operation.
- Custodian bank: supervising, depositing and preserving assets of the fund and the fund management company in order to protect the lawful rights and interests of investors.
- Auditing company: checks and evaluates the operation of the fund annually.
- Step 1: Investors (Investors), after studying documents about the Open-ended Fund, if deciding to participate in the Fund, open a CCQ trading account at the Distributors appointed by the Fund Management Company ( is a direct management unit of the Open Fund).
- Step 2: After having an account, investors can submit a registration form to buy a fund certificate (or sell a fund certificate) at the Distributor on the day of transaction of the fund unit (specified in the fund's charter). The amount of fund purchase will be transferred directly from the Investor's account to the Fund's account at the Supervisory Bank.
- Step 3: Distributors after opening accounts for investors, can receive registration certificates to buy or sell the fund certificates of investors and transfer valid tickets to QLQ Company.
- Bước 4: Công ty QLQ sau khi nhận được phiếu mua CCQ của NĐT, cùng xác nhận đã nhận đủ tiền mua CCQ của NĐT từ Ngân hàng Giám sát sẽ phát hành ra số lượng CCQ tương ứng với số tiền nhận được và gửi xác nhận giao dịch đến Đại lý phân phối.
In case of receiving a request to sell the fund certificates of the investor, the Fund Management Company will revoke the respective issued units and send a confirmation to the Distributor, and at the same time send a request to the Supervisory Bank to pay for the money back. into the account of the investor.
- Step 5: Distributor sends confirmation of transaction result and confirms ownership of Fund Certificates to investors.
4. Some governed legal documents
- Circular No. 183/2011 / TT-BTC dated December 16, 2011 of the Ministry of Finance, guiding the establishment and management of open-ended funds in Vietnam (attached file)
- Circular 212/2012 / TT-BTC dated 5/12/2012 guiding the establishment, organization and operation of the Fund Management Company
