First active open fund gets State backing

First active open fund gets State backing

The Bao Viet Equity Dynamic Open Ended Fund (BVFED), managed by Bao Viet Fund Management Company, was granted a licence earlier this week, the State Securities Commission announced on Tuesday.

It is the first open-end fund operated as an active index fund.

For this type of fund, initial investment proportions are based on a benchmark index and the fund manager proceeds to add higher performing stocks that are unrelated to the underlying index.

The fund manager will then actively manage the composition of these non-benchmark stocks in order to earn yields that exceed the benchmark index.

BVFED bases its portfolios according to the VN30, which represents the HCM City Stock Exchange's 30 biggest stocks.

It will actively adjust the proportion of the assets to capture opportunities in both the stock markets and fixed interest rate market (fixed interest rate assets include bonds and deposits).

BVFED is also Viet Nam's fifth open-end fund. Pham Ngoc Quang, vice head of Bao Viet Fund's product development division, said that it would invest in stocks and bonds. The proportion of stocks would be capped at 80 per cent of the portfolios, while bonds would be capped at 95 per cent.

BVFED plans to raise funding first from members of Bao Viet Holdings Group (BVH), then investors from outside the group as well as Japanese investors. It must raise minimum initial capital of VND50 billion (US$2.3 million).

On Tuesday, the commission also approved converting the Vietnam Securities Investment Fund (VFMVF1) into an open-end fund. 

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