Frequently Asked Questions
I have many options to save and invest and can put my money into bank deposits, stocks, gold or land. Why should I care about VinaWealth’s funds?
- First of all, congratulations because you have made a concerted effort to save and invest your money and your investments will continue to help you build wealth. You are well on your way to achieving your financial and other important personal goals in life.
- When investing, you should consider allocating your money across various types of investments (assets) to reduce risk and achieve the best return – known as diversification – because not all investment assets can bring about the best result at all times, due to the fluctuations of the local economy and global financial markets. Diversification reduces the risk of losing your capital by spreading your money across different assets that will behave differently in different market cycles.
- By investing in VinaWealth’s open-ended funds, you will benefit from diversification. An open-ended fund invests in a basket of securities (stocks, bonds or combination of both) and is naturally diversified in order to reduce risk while maximizing return. An open-ended fund is a simple form of investment, appropriate for a range of investors, even those with limited investment experience. Investment in a fund does not require a large sum of capital, and is advantageous when compared to the poor liquidity of real estate or the high volatility of gold. A fund investment is a good option for investors looking to participate in Vietnam’s stock market and to diversify their portfolio.
What types of open-ended funds does VinaWealth offer? Which fund should I invest in?
- VinaWealth was among the first fund management companies in Vietnam to introduce open-ended funds. Currently, VinaWealth has two funds: the VinaWealth Enhanced Fixed Income Fund (VFF) and the VinaWealth Equity Opportunity Fund (VEOF). VFF is a bond fund appropriate for investors who want to achieve stable returns at low risk, and VEOF is an equity fund appropriate for investors who want higher, stock market returns and can accept higher levels of risk. VFF’s target is to beat the 12-month bank deposit rate while VEOF’s target is to outperform the VN30 Index. Investors can choose to invest into either or both funds, depending on their expected level of return, risk appetite and investment time horizon.
- Each fund has its advantages. The following factors can help you as the investor choose the appropriate fund: (1) Your return expectation. Please note that risk and profits (expectation) are proportional to one another. For example, if you desire higher investment returns and are willing to take some risk, you can choose to invest in VEOF. Conversely, if you accept lower returns and do not want to risk losing capital, VFF is the more appropriate choice. (2) Your tolerance for risk. You current financial situation may allow you to take more risk to seek higher returns or you are simply more willing to accept the riskiness of uncertain market movements. The higher your risk tolerance, the more you should consider investing into VEOF. (3) Your investment timeline. If you like to invest only for the short-term, stocks can be risky because their values tend to fluctuate in the short-term. But if you can invest for the long term, you should be willing to take on some risk to seek a higher return. For example, if your investment horizon is less than one year, you should select to invest into VFF; for durations of a year or longer, you may want to consider investing in VEOF.
- For more customized advice, please contact a VinaWealth advisor. We can provide comprehensive information and the best advice on investment options that best suit you.
I would like to invest in VinaWealth’s open-ended funds. How much initial capital is the most effective?
- After you have decided (based on the advice of experts or your own research) to invest into VFF, VEOF, or both, you should consider investing regularly over the long term. How much you invest is less important than investing regularly and in a disciplined fashion. A regular investment approach allows you to better plan your savings & investment, and reduces the need to worry about possible fluctuations in the stock market affecting your return.
- How much to invest depends on your financial goals and capabilities and when you need to achieve your set targets. However, start investing as soon as possible. Over time, inflation will increase your cost of living and erode the value of your savings, so you need to invest and achieve higher levels of return in order to keep up with or even beat inflation.
- With VinaWealth’s funds, you can open an account with a very low amount – as little as VND 200,000 if you choose to enroll in VinaWealth’s VinaSave program. With a regular account, you only need VND 2,000,000 to start. We generally encourage investors to try investing a small amount at first so they can slowly build comfort with our funds. If you are already putting a lot of money into the bank, you can try allocating 20% to 50% of that money to invest into funds. Over time, as you gain further financial knowledge and are pleased with your return, you can invest more.
I have invested in VinaWealth’s Funds. How long is the investment term and when can I withdraw my money?
- An investment in a fund is different from term deposits at banks. You can invest anywhere from a few months up to years, and can withdraw your money at any time. However, you should consider longer term investments, at least for one year. Securities fluctuate in value over the short-term and are not appropriate to be used as short-term investment vehicles. Funds may not be suitable for short-term traders looking to profit from arbitrage trades.
- You do not need to specify a “term” when investing into VinaWealth’s funds. You can always choose to withdraw your money for whatever reason, whether due to changes in investment objectives, financial needs, or major emergency. In other words, you may request redemption of VinaWealth fund certificates to withdraw cash, and cash will be deposited into your bank account generally within a week. Under the regular investment program, you will pay a redemption fee if you withdraw funds invested within the first year; after one year, there is no redemption fee. Under the VinaSave program, you will pay a redemption fee within the first two years; after two years, there is no redemption fee. Please refer to VinaWealth’s fee schedule for more specifics on redemption fees.
What are the risks associated with investing in VinaWealth’s funds? If a fund loses money, will VinaWealth compensate investors?
- Please note that all forms of investment contain a certain level of risk. For example, buying gold is a popular investment asset, and recent gold price fluctuations made gold quite attractive to speculators. However, when the government imposed trading restrictions on gold, gold became more risky and lost some of its value.
- Real estate investments, after a boom period similar to the stock market, have also experienced declines in value. Additionally, to invest in real estate, you need large amounts of capital and the risks of loss and difficulty in exiting your investments are high if you do not have enough information and experience in this industry. Many investors have lost their money when investing into real estate, especially if they took out loans to finance these investments.
- You might think that putting money in the bank is the safest bet and that there is no risk! But the interest rate is usually low for bank deposits, and inflation may outstrip the bank’s interest rate. Additionally, poor corporate governance and risk management practices at some small banks may place investor deposits at risk. Investors should choose large, well-capitalized banks and be wary of smaller banks that offer higher interest rates to attract customers.
- Vietnam’s stock market after a growth “bubble” has become more stable and is poised to grow over the medium to long-term. Historically, in most markets, the stock market has been the most efficient and reliable investment vehicle for the widest array of investors. However, the economy always suffers from volatility from time to time, so stock market ups and downs are inevitable.
- VinaWealth funds invest into a basket of securities that includes stocks, bonds, money market instruments, bank deposits, and other types of assets. The diversification of a fund’s portfolio is designed to limit risk and optimize return. The exact allocation depends on each fund’s strategy and each fund is associated with a certain level of risk. The most important thing is that funds are actively managed by a team of investment professionals with appropriate expertise and resources to mitigate risks while maximizing return.
- VinaWealth operates within a framework of strict legal and compliance standards. Investment policies and risk management are specified in both the fund prospectuses and charters. VinaWealth fully complies with prevailing regulations to protect the rights and interests of investors.
- VinaWealth funds invest into securities, which all bear some level of volatility and risk of loss of capital from time to time purely due to market fluctuations. Investors must understand and accept these levels of risks when they choose to invest into our funds. In cases of poor fund performance that is not due to VinaWealth’s negligence or willful wrong-doing, VinaWealth will not be held liable for compensating investors.
What level of returns can I expect when I invest into VinaWealth’s funds? What is the level of return that VinaWealth commits to investors?
- The expected level of return for each fund depends on the investment objective of the fund and the assets into which the fund invests. With the VinaWealth Enhanced Fixed Income Fund (VFF), investors can expect returns higher than the 12-month bank deposit rate. The return objective of the VinaWealth Equity Opportunity Fund (VEOF) is to outperform the VN30 Index. Interested investors can review the actual performance of each fund on VinaWealth’s website (www.vinawealth.vn) or by contacting VinaWealth.
- Under current regulations, fund management companies cannot make any statements of guaranteed returns or commitment to investors. However, there are ways for investors to assess the certainty of returns based on the fund management company’s track record and the professionalism of its team. Investors wishing to better understand the performance of VinaWealth’s funds should review all available documents as well as meet with VinaWealth staff to learn more.
When I invest in VinaWealth’s funds, do I have to pay any fees or costs? Are investment profits taxed, and if so, how much?
- Charges related to investments in open-ended funds can be grouped into two categories: (1) Transaction fees (only arise when buying, selling or switching fund certificates) expressed as a percentage of the transaction value (e.g. 0.75% of the amount subscribed) and are deducted before allocating money to buy fund certificates or returning cash to investors upon redemption. VinaWealth charges up to 0.75% for subscriptions and various fees for redemption, depending on the duration of the fund units held. (2) Management fees and fund operating fees: these are annual fees, calculated as a percentage of net asset value (NAV) and are deducted from the fund’s NAV periodically. The fund management fees are paid to VinaWealth for providing investment & other management services and bank fees are paid to the bank for providing various services. VinaWealth is currently using Standard Chartered Bank Vietnam for custody, administration and transfer agency services. The total cost of management and fund operating fees generally does not exceed 2% of NAV per annum.
- For further information about fund fees and expenses, investors should refer to each fund’s prospectus. Fee structures may change. However, any changes must undergo a vetting process and the revised prospectus will be registered with the State Securities Commission before the new fee schedule takes effect.
- With regards to tax on investments, for domestic individual investors selling fund certificates, the fund management company shall withhold the securities transaction tax of 0.1% of the transaction value. This withholding tax will not be applied to domestic institutional investors because any gains from investments are added to business income and taxed at the prevailing corporate income tax rate. If the fund pays dividends (highly unlikely for open-ended funds in Vietnam because of the high tax imposed on dividend income), investors will be taxed at the prevailing dividend tax rate.
- For foreign individual investors, the withholding tax of 0.1% will also be applied. No withholding tax will be applied for foreign institutional investors. Foreign investors may also have to pay any applicable taxes based on the regulations in their home countries.
What if I need to sell the fund certificates for cash? What are the procedures? How much time does it take to get my money from sales of fund certificates?
- With open-ended funds, the fund is responsible for redeeming fund certificates at the request of investors. When investors wish to redeem their fund units for cash, they can easily sell the fund units back to VinaWealth at the most current net asset value (NAV).
- VinaWealth funds currently trade weekly on Tuesday (the trade date or T date). Investors simply transfer sales orders to VinaWealth or any other distributor by 10:30 am on Monday (the deadline to close orders, the T-1 date). Under the current process, VinaWealth will redeem the fund certificates and send money to the investor’s bank account within T+5 days.
I do not have much experience investing in funds. Are the interests of investors protected by the law, and how? What information can I rely on to feel more secure?
- VinaWealth and our investment funds operate according to strict legal provisions to protect the interests of investors.
- In order to launch a fund in Vietnam, any fund management company must adhere to a strict and lengthy process. VinaWealth has to submit an application to the State Securities Commission (SSC) that includes the following key documents: fund prospectus, fund charter, custodian bank agreements, distribution agreements, information on all key directors and personnel, and other important documents. The SSC will review the application and issue an initial public offering (IPO) certificate if the fund and fund management company meet requirements. If the IPO is successful, the fund management company files appropriate reports to the SSC to obtain a certificate of fund registration. During the fund’s operation, both VinaWealth and the funds are closely monitored by independent regulatory and professional organizations such as the SSC, the custodian bank, the auditor, the Board of Representatives, and the Annual General Meeting of Investors.
What should I do before investing in VinaWealth's Funds?
- Before investing, you should know what your financial goals are, when you need to reach your goals, your risk tolerance level and investment time horizon. Based on these factors, you can select the investment fund(s) that are most appropriate for you. Please contact VinaWealth’s advisors for a detailed consultation.
- The procedures to invest in VinaWealth’s funds are very simple. You should first contact VinaWealth or any of our distributors to open a fund trading account. The fund trading account is very similar to a bank account and records the number of fund certificates you own over time. You only need to fill out some minimal paperwork and submit a copy of your identification card (or passport for foreign investors) to open this account. Once the trading account is opened, you can place orders to buy, sell or exchange fund certificates. To buy fund certificates, you need to transfer money from your bank account to the account of the appropriate fund at Standard Chartered Bank. A VinaWealth representative will confirm receipt of your money and issue you a statement verifying the amount invested.
How do I monitor the financial status of the VinaWealth funds that I invest in?
- Net asset value (NAV) is the key criterion to measure the performance of any fund. The NAV is the value of the fund after subtraction of all fees and liabilities (if any). NAV is recorded both as a total for the fund and as NAV per fund certificate. Investors should follow the NAV per fund certificate to see how well the fund is performing over time.
- The NAV of VinaWealth’s funds is updated and posted weekly on VinaWealth’s website. Investors may also contact VinaWealth at any time to obtain the latest information on each fund’s NAV. In addition, fund performance is updated monthly, quarterly, and yearly. The annual reports are also sent to the SSC in accordance with regulations.
- Each year, each fund holds a general meeting for all investors. At this meeting, investors will receive detailed updates directly from VinaWealth, and will have the opportunity to discuss and vote on issues related to fund strategy, fees, representatives and other important topics. We encourage all investors to attend this annual meeting, in order to obtain details about the funds and voice their opinions on important matters.
I can choose between bank deposits or life insurance to save money to meet my personal financial goals. How are VinaWealth’s funds any different or what are the advantages and disadvantages compared to these other two products?
- These are all personal finance products that can help you save and invest money to prepare for your financial needs in the future. However, each product plays a different role in your overall financial planning. It is difficult to say which one is a better product. To some extent, they all complement one other and you should consider all these products as part of a diversified, well-managed personal financial plan.
- If your goal is to save and invest in order to meet longer-term objectives such as the purchase of a home or a car, paying for your children’s college education or even saving for your retirement, you should seriously consider investing into open-ended funds. Funds that invest into the stock market are your best option because they can generate higher returns over a longer time horizon. Funds also offer you flexibility and liquidity. You can choose how much to invest and how frequently; you don’t need to commit to any schedule of investment. Additionally, if you need to withdraw the money at any time for whatever reason, you can easily do so without any penalties or issues.
- Short-term savings goals are best met with bank deposits. You first should have a bank savings account with enough money to pay for six months of expenses to cover emergencies and other unexpected expenses. This account should be highly liquid so you can access the money immediately whenever you need it. If your goal is to save for the short term (less than 1 year) you should put some money in the bank to earn interest. However, you should remember that interest rates are not fixed and are sometimes higher or lower than inflation. Some other factors to consider are the length of the deposit term and penalty if you withdraw your money before the term’s expiration.
- Life insurance is to financially protect you and the dependents in your family in the unfortunate event of death, or total and permanent disability. It is a protection product, not an investment product, though some life insurance plans (e.g. universal life or unit-linked plans) do have investment components that allow some of your money to be invested in funds. However, remember that when you purchase a life insurance policy, much of your money goes into paying for insurance, not savings or investments. You must also commit to paying for that insurance within a set timeframe, usually over 10-20 years, and you lose benefits if you do not make all payments.
- In VinaWealth’s opinion, you should use funds or other products for the savings and investment component and should buy insurance purely for the protection benefit. The best life insurance products are simple term life policies that pay out a lump sum in the event of the insured’s death or permanent disability, but have no other investment or savings component. The insured pays for a set term, usually 20 years, and the benefit is only received if the death or permanent disability occurs; otherwise, the term and payments end after 20 years and no benefit is received. This policy is most appropriate for younger families who wish to protect their spouses and children in the event of a death.
I prefer to invest in the stock market directly. Why should I invest indirectly through VinaWealth’s funds and pay management and other service fees?
- So you’ve got a lot of valuable experience from participating in the stock market. In our opinion, in order to invest successfully, you would need enough information (about the market, the industry, majority investors, the company and its short/long term business goals, etc.) and have the time and expertise required to implement strategies to capture investment opportunities and manage risks. So if you lack one of the success factors mentioned above, you might consider investing through VinaWealth’s funds. For example, your career is going well but you do not have much time to track market information, follow individual stocks or put in daily trade orders. Perhaps it’s time you consider taking advantage of VinaWealth’s professional investment services. Vietnam’s stock market at times is volatile. The opportunities and challenges are both great, but with limited resources, how can you successfully manage your investment portfolio? Wouldn’t it be better to delegate management of your portfolio to experts? This could help lessen your financial stress, and allow you to devote more time to your career and family, while at the same time creating more value and more money for you! If you are willing to pay small fees, you will appreciate the value you can receive from professional investment services.
What is VinaWealth’s experience in establishing and managing open-ended investment funds?
VinaWealth is a pioneer among fund management companies in Vietnam. VinaWealth was the first fund management company to receive the license in December 2012 for Vietnam’s first open-ended fund, the VinaWealth Enhanced Fixed Income Fund (VFF). VinaWealth launched its second open-ended fund, the VinaWealth Equity Opportunity Fund (VEOF), in April 2014. VinaWealth expects to launch additional investment funds in the near future.
VinaWealth is a legal entity that operates independently, but receives comprehensive support from VinaCapital Group, the largest asset manager in Vietnam. VinaCapital has over 10 years of investment management experience in the Vietnam market with total assets under management valued at over USD $1.5 billion (as of June 2014). VinaCapital continues to be among the leading investment firms in Vietnam.
What does VinaWealth do before making investment decisions?
- VinaWealth’s investment decisions are made collectively by the portfolio managers and the Investment Committee. The investment analysis and decision process requires multiple steps, including strategy development, virtual portfolio creation, sector allocation, economic analysis, financial analysis and company assessment. The fund portfolio managers conduct the analyses and make investment recommendations, which must be thoroughly reviewed and approved by the Investment Committee. After a recommendation has been approved, an independent trading team conducts the trades. Our portfolio managers monitor each fund’s portfolio daily and make adjustments as required to minimize downside risk while maximizing profits.
- As a professional organization, VinaWealth’s investment decisions are not affected by psychological factors or rumors. Our decisions are made based on rigorous data mining, trustworthy information, diligent research and rational thinking. We believe fundamental research drives the best investment decisions, and refrain from trends and speculative thinking.
I think investing is too risky. I cannot afford to lose all my money!
- In life, everything has two sides. The things we use in our daily lives always have benefits and dangers – such as electricity, water, transportation – but we cannot live without them. Also, all forms of investments (including gold or bank deposits) hold a certain amount of risk. Most importantly, you need to be aware of what the risk is, and how to minimize it. In other words, understand the “product” that you invest in. One problem with the rules of investing is that the higher the risk, the higher the return, the higher the expectations, and vice versa. In some cases, you can lose money when you invest. This can happen, for example, when you buy land with disputed ownership paperwork or buy shares in a listed company that subsequently goes bankrupt.
- When you invest through VinaWealth’s funds, the chance that you will lose all of your money is very low and unlikely to occur for the following reasons:
- The fund invests in a diversified portfolio of many assets, which reduces risk and probability of loss. When the stock market experiences volatility, the fund’s assets will be deployed into less risky assets, such as bonds and bank deposits, which are safer and tend to move opposite to the stock market. When the economy experiences low interest rates and the stock market is favorable, the fund’s assets will be focused on the stock market to seek higher returns.
- The fund is actively managed by a team of professional staff working full-time. The team monitors the portfolio on a daily basis and makes adjustments as required to protect capital and generate returns. In the event of loss, the team will take rapid action to exit the investment and mitigate that loss.
Why do I have to pay when investing through VinaWealth’s funds, when I do not have to pay any fees when depositing at the bank?
- VinaWealth’s funds are actively managed investment products that generate higher returns than bank deposit rates. To provide these services for our investors, VinaWealth and other fund service providers must charge fees. These fees have been set in accordance with prevailing regulations as well as current market practices in Vietnam.
- VinaWealth is responsible for raising capital, establishing the fund, making investment decisions and actively managing the fund for the benefit of investors. For these services, VinaWealth receives an annual management fee (e.g. 1% per annum on the net asset value of the fund for VFF and 1.75% for VEOF). Additional fees must be paid to the bank, Standard Chartered Bank, which provides various services required by law, including custody, administration and transfer agency. The fund’s auditor also receives a small fee for providing semi-annual and annual auditing services. All of these fees have been set at reasonable levels and are reviewed annually to ensure investors continue to receive the best service and benefits.
If VinaWealth goes bankrupt, what happens to the money that I invest in the fund?
- The open-ended funds managed by VinaWealth are managed independently from one another and separated from VinaWealth’s company assets. In other words, the fund’s assets are not assets of VinaWealth, and are not subject to covering losses or debts owed (if any) by VinaWealth. The entire net asset value of the fund belongs to investors and has nothing to do with VinaWealth’s financial position. VinaWealth is simply the fund manager and only receives a fee for managing the funds. VinaWealth’s financial performance is unrelated to the funds’ performance.
- Furthermore, the fund assets are deposited at the custodian bank, Standard Chartered Bank, as required by law. No one at VinaWealth has access to these assets without the approval of Standard Chartered Bank, which is an independent third-party service provider. Standard Chartered Bank is among the world’s top banks, with the expertise and reputation to provide international standard fund services.
- In the unlikely event that VinaWealth goes bankrupt, the assets in the funds are protected and are not related to VinaWealth’s losses. The value of the funds will be maintained because the underlying assets invested, including bonds, stocks and bank deposits, are not related to VinaWealth. In the event of bankruptcy, an Investors Meeting will be held to vote to replace the fund manager or to liquidate the fund and return money to investors. In either case, investors are protected and will receive the full value of the funds.