Fund-management profits ‘unsustainable'
Fund-management profits ‘unsustainable'
Most fund management firms made profits not from their core business, but financial activities in the first half of the year.
However, some industry insiders are concerned about the trend. They say sustainable growth of fund management firms whose profits mainly come from financial activities are often extremely volatile as parent companies or related partners can withdraw their capital unexpectedly.
Among the 11 fund management firms that posted profits, only VFM and BIDV-Vietnam Partners reported a slight rise in profits from its core business of fund management and managing investment portfolios. The rest made profits mostly from deposits and financial-investment transactions.
Up to 98 per cent of Vietinbank Management Company's VND54 billion (US$2.56million) profit in H1 was from financial activities. Fees for fund management and investment portfolio management brought the company only VND760 million.
Besides Vietinbank, ACB, IPA and Ban Viet fund management firms also profited most from financial activities. Profits from deposits made up 90 per cent of ACB Fund Management Company's total profits. The figures for Ban Viet and IPA were also high at 88 and 82 per cent, respectively.
Industry insiders said that most of the firm's profits came from financial transactions related to its parent companies. ACB Fund Management Company's profit, for example, mainly came from its deposit in its parent company, ACB.
In the first half of the year, many fund management firms faced difficulties. Big firms also reported losses due to a sharp decline in turnover and profits from core business performance.
VinaWealth, which is managing the country's first open-ended fund, VFF, plans to set up two others, posted a loss of VND9.2 billion in H1.
Manulife Vietnam also made a loss of VND3.1 billion and the loss made by the Vietcombank Security Investment Fund Management Joint Venture Company was VND6.7 billion.
Although still posting profits in H1, pre-tax profits of Ban Viet Fund Management Company and SSI Fund Management Company declined half against the same period last year.
vietnamnews
