Open-end funds find it hard to attract capital
Open-end funds find it hard to attract capital
It is very difficult now for open end funds to attract capital from investors, who have become more cautious in the economic recession.
Opinions from the well-informed circle said that an open end fund, which was once a close end one, has been facing the massive capital withdrawal. The imbalance in the cash inflow and outflow has threatened the existence of the fund.
It is now the time for the Bao Viet Equity Dynamic Open Ended Fund (BVFED) and Eastspring (ENF), and many other funds, to mobilize investment capital, while they still have not thought of the capital disbursement.
However, raising funds at this moment requires a lot of exertion. A finance expert who had many years working for a fund management company, said investment funds have organized many roadshows to introduce about them and call for investment, but the results remain unsatisfactory.
In fact, the funds have been running on the “seed money,” or the capital from the investors who have close relations with the funds, from loyal clients and their workers as well. Meanwhile, in principle, the capital of the funds should come from the public.
An open end fund has recently announced that it has raised VND70 billion worth funds from the initial fund certificate public offering which attracted 140 individual and institutional investors, including foreign investors.
As such, every investor pours VND500 million into the fund, the figure which is believed to be “satisfactory.”
However, it is really very difficult to find the individual investors who are willing to pour hundreds of millions of dong into investment funds.
The brokers of some securities companies affirmed that there are not many big investors. In most of cases, every investor spent several millions of dong to buy the funds’ certificates.
This explains why open end funds do not release the figure about the number of investors. They only show the total capital mobilized. Meanwhile, the majority of money, as said above, is the “seed money.”
Analysts have noted that it is more difficult for open end funds to mobilize capital when the stock market prospers.
A preliminary report of a group of investors last month showed that investors would have 50 percent of probability of making profits if they buy shares randomly. And the probability level would be higher if they think carefully before making investment decisions.
The conclusion of the group of investors shows the investors’ high expectations on the stock market. The fact that some shares have seen the prices rise sharply over the last three months has made investors excited.
In other words, the market at this moment is so encouraging that investors think they can make investments themselves to make profits instead of making investments through funds. They would only need investment funds, which are more professional in making profits with money, when the market declines.
It is estimated that 10 open end funds have been set up so far, a relatively high number for a short time. Therefore, analysts have every reason to warn about the “dilution phenomenon,” which occurs when there are many funds that need capital and few investors who have capital.
vietnamnet
