An investment fund is a non-bank intermediary financial institution that draws idle money from various sources to invest in stocks, bonds, currencies, or other types of assets. All of these investments are professionally and strictly managed by fund management companies, supervisory banks and other authorities.
Investors often have confusion between investment funds and investment fund management companies. Functionally, fund management company is a company that manages investment funds, and investment funds can be considered as products and services that fund management companies provide to investors.
Each investor investing in the fund will own a portion of the fund’s total portfolio. This holding is expressed through the possession of fund certificates.
To establish a fund, a fund management company must issue fund certificates. A fund certificate is also a type of stock and has the characteristics of a stock, such as: confirming ownership, confirming the right to get a return on equity, and depending on the characteristics of the fund, fund certificates can be listed on the stock market.
The attractiveness of fund certificates includes the safety and time-saving factors, compared to investors buying and selling stocks on their own. The reason is in the fund managament companies, we have many leading investment experts to do those investment stuffs for investors. Investors only need to focus on their professional work and enjoy the fruits of the outcomes.
In addition, in terms of investment effectiveness, time of capital return and investment efficiency is a factor that makes fund certificates more attractive compared to investing in Gold, Real Estate or even savings.
Based on the different classification criteria, we can distinguish different types of funds. However, in the current financial market of Vietnam, there are some types of investment funds as below:
1. Stock fund
2. Balanced fund
3. Money market fund
4. ETF fund
5. Exchange fund
6. Retirement fund/Pension fund
Financial investment is a job that requires a lot of expertise, market knowledge, and especially time. In addition, there are some types of investment such as bond investment and index investment which the investors can not invest in by themselves. Therefore, individual or legal investors often decide to invest through the funds because of the following 06 factors: to reduce the risk by diversifying portfolios; To save costs but still meet the profit requirements; Professional management; Closely supervised by competent authorities; To invest in some specifics financial products such as bonds, exchange-traded funds etc…
The document provides accurate, truthful and objective information about Open-ended funds and information related to the issuance and trading of Fund Certificates.
3. The Board of Representatives or Representative Board
A committee is elected by the General Investors’ Meeting to represent Fund Holders.
4. Fund Certificates
Fund certificate means a type of securities certifying investors’ ownership over the capital they have invested in open funds.
If investing in a joint stock company, the investor receives the stock. If investing in open funds, investors receive fund certificates.
5. Dividends of the Fund
The profits distributed by the Fund correspond to the number of Fund Units held by the Fund Unit Owners, and approved by the General Meeting of Investors.
6. General Meeting of Investors
The Meeting of Fund Holders is held periodically or extraordinarily to approve the issues of the Fund requiring the decision of the Fund Holders. The General Meeting of Investors is the highest authority of the Fund.
7. Transfer Agent
The Bank is authorized by the Fund Management Company to manage the Register of the Open fund.
The agent is authorized to receive Fund Unit trading orders from investors.
Documents regulating management regulations for Open funds.
10. Acceptance Point
The head office of the Distributor or its branches, transaction offices, representative offices are authorized to receive orders from investors.
11. Application Form
Application for initial purchase of Fund Units.
12. Fund Unit or Unit
Units that own the Fund’s capital and the owners have voting rights.
Option to Receive Cash Dividends.
Options Re-invest Dividends.
15. Net Asset Value or NAV
The total value of assets held by the Fund minus liabilities at the Valuation Date.
Hanoi Stock Exchange.
Ho Chi Minh City Stock Exchange.
Initial public offering means when the Fund Unit is publicly offered for the first time.
Get to know and get to know customers.
20. Sell Order
The Order of Fund Holders requires the Fund to repurchase a part or all of the Fund Units owned by the Fund Unit Owners.
21. Sell Order Accepted
The redemption order of the Fund Unit Owner is accepted to execute after the number of Fund Units redeemed has been confirmed owned by the Fund Unit Owners.
22. Fund Switching Order
The Order of Fund Units Owners requires selling part or all of these Fund Units to purchase other Fund Units.
23. Fund Switching Order Accepted
Fund Switching Order of Fund Units Owners is accepted to execute after the number of Fund Units that will be sold is confirmed ownership by the Fund Unit Owners.
24. Transfer Order
Order of Owners of Fund Units transfers ownership of a specified number of Fund Units to others in the form of gifts, inheritance or court orders.
25. Transfer Order Accepted
The transfer order of the Fund Unit Owner is accepted for execution.
26. Orders Accepted
Each Accepted Sell Order or Accepted Buy Order or Accepted Fund Switch Order or the Acceptable Transfer Order or a group of orders including the Accepted Sell Order and the Accepted Buy Order or Switch Order Funds Accepted and Transfer Orders Accepted.
27. Buy Order
Investor’s order to buy Fund Units.
28. Buy Order Accepted
The buy order of the investor is accepted to execute after the application for registration is accepted and the purchase money is confirmed received.
29. Fiscal Year
The 12-month period begins on January 1 and ends on December 31 of the year. The Fund’s first fiscal year begins from the date the SSC issues its license to the end of December 31 of that year, unless the remaining period of the first year is less than 3 months, in which case, The first fiscal year will end on December 31 of the following year.
30. Final List Date
The date on which the Fund Units Owners are recorded on the Register is deemed eligible to attend the General Meeting of Investors, receive dividends and other Fund activities.
31. Business Days
The day the stock market was opened for trading in Vietnam.
32. Valuation Date
NAV date of the Fund was determined.
33. Transaction Date
The Business Day on which the Fund Management Company, on behalf of the Fund, issues, redeems, transfers and / or transfers Fund Certificates.
34. Supervisory Bank
The Bank provides preservation, depository services, documents certifying the Fund’s legal assets ownership, economic contracts, and other documents related to the Fund’s assets; supervise the Fund’s operations; supervise the Fund’s asset management activities performed by the Fund Management Company.
35. Owners of Fund Units
Registered investors are the owners of Fund Units in the Register Book.
A periodic investment program means a plan to invest in the Fund on a regular basis.
37. Register Book
The document records information about each Fund Unit Owner.
38. Time to Close an Order Book
The final time of trading orders for Fund Units
39. VN Index
Stock index of the whole market of HSX.
40. VN100 Index
The stock index includes the 100 stocks with the largest capitalization and high liquidity on the HSX.
41. Charter Capital
Total capital of the Fund contributed by all Investors in the first public offering.
A stock fund, or equity fund, is a fund that invests in stocks, also called equity securities. Fund assets are typically mainly in stock, with some amount of cash, which is generally quite small, as opposed to bonds, notes, or other securities.
A balanced fund is a mutual fund that contains a stock component, a bond component and sometimes a money market component in a single portfolio. Generally, these funds stick to a relatively fixed mix of stocks and bonds. Their holdings are balanced between equity and debt with their objective between growth and income. Hence, their name “balanced.” Balanced funds are geared toward investors who are looking for a mixture of safety, income, and modest capital appreciation.
A money market fund is a kind of mutual fund that invests only in highly liquid instruments such as cash, cash equivalent securities, and high credit rating debt-based securities with a short-term, maturity—less than 13 months. As a result, these funds offer high liquidity with a very low level of risk.
An exchange-traded fund (ETF) is a type of security that involves a collection of securities—such as stocks—that often tracks an underlying index, although they can invest in any number of industry sectors or use various strategies. ETFs are in many ways similar to mutual funds; however, they are listed on exchanges and ETF shares trade throughout the day just like ordinary stock.
A bond fund, also referred to as a debt fund, invests primarily in bonds (government, municipal, corporate, convertible) and other debt instruments, like mortgage-backed securities (MBS), with the primary goal of generating monthly income for investors. The bond fund offers relatively more stable income but not much higher than the stock fund due to the stability and less volatility of the bond market. For many investors, a bond fund is a more efficient way of investing in bonds than buying individual bond securities. Unlike individual bond securities, bond funds do not have a maturity date for the repayment of principal, therefore, the principal amount invested may fluctuate from time to time.
Pension fund is essentially an investment fund established by raising capital from employees working in the business on a regular basis over their working time. The fund will invest funds to create long-term stable asset growth and thereby pay employees a pension when they reach retirement age.
Pension funds hold a very large amount of capital, and most of the institutional investors in countries around the world are pension funds.
An open-end fund is a diversified portfolio of pooled investor money that can issue an unlimited number of shares. The fund sponsor sells shares directly to investors and redeems them as well. These shares are priced daily, based on their current net asset value (NAV). Some mutual funds, hedge funds, and exchange-traded funds (ETFs) are types of open-end funds.
A closed-end fund is a portfolio of pooled assets that raises a fixed amount of capital through an initial public offering (IPO) and then lists shares for trade on a stock exchange.
A closed-end fund has a professional manager overseeing the portfolio and actively buying and selling holding assets. Similar to an exchange-traded fund, it trades like equity, as its price fluctuates throughout the trading day. However, the closed-end fund is unique in that, after its IPO, the fund’s parent company issues no additional shares. Nor will the fund itself redeem—buy back—shares. Instead, like individual stock shares, the fund can only be bought or sold on the secondary market by investors.
Public fund means a type of securities investment fund that is allowed to offer fund certificates to the public. Public funds are generally not legally restricted by the maximum number of investors who invest in the fund. However, due to the large number of investors, public funds have many investment limits prescribed by law to ensure the safety of the capital of investors in the fund.
Closed-end public fund is a type of fund whereby the fund has no obligation to redeem investment fund certificates issued to the public at the request of investors. Therefore, investors can only recover the investment capital by transferring investment fund certificates to other investors in the stock market.
Open-ended public fund is a type of fund whereby the fund has the obligation to redeem investment fund certificates at the request of investors.
Member fund means a securities investment fund which is established with capital contributed by certain investors and does not issue fund certificates to the public. Investors in member funds are called capital contribution members or investment fund members. The law usually has a limit on the number of capital-contributing members of a Member Fund. Securities law stipulates a maximum of 30 members’ fund and all members must be legal entities.
Members of the fund are usually professional investors with strong financial capabilities, such as financial companies, banks or insurance enterprises. Capital-contributing members have more rights to participate in fund management than investors in public funds, and their risk tolerance is better, so member funds are not subject to the same investment restrictions as public funds. .
When investing in funds, especially for individual investors, they will enjoy many benefits such as: saving time and effort because the assets of investors have been managed by leading investment experts; optimizing capital efficiency – maximizing profits – minimizing risks thanks to a portfolio designed to closely follow each individual needs; having chance to access to the best investment opportunities; flexible capital and high liquidity etc …
As well as investing in other investment funds, open-end funds are suitable for investors who do not have sufficient in-depth knowledge about finance and investment; busy investors who do not have time to monitor the market daily; Investors who want long-term investment with a diverse portfolio.
The process of registering an investment in an open-end fund for investors at investment funds will usually include the following main steps:
– Fill in the application form for investment participation: the form will be provided at the distribution location or / and on the website of the fund management company.
– Both individual investors and institutional investors must provide proving documents
– Paying for the purchase of fund certificates
According to the Laws, when participating in the stock market in general and investment funds in particular, there is always an independent third party with the role of supervision and management to operate the funds within the laws, for instance to ensure that the investment fund would cary out sufficient responsibilities and obligations to investors. Those oservance parties include:
– Supervisory bank: to be responsible for keeping money and assets of investors, to supervise investment activities of fund management companies and to reserve the right to prevent any action contrary to the Fund Charter and Prospectus
– State Securities Commission: to act as a state management and supervision agency, to oversee the operation and performance of securities companies, fund management and investment funds in the market.
Each investment fund has its own regulations on fees that investors must pay to the fund management company as well as expenses that the Fund must pay to the fund management company and service providers to the Fund. All costs are clearly stated in the Fund Prospectus and Fund Charter and usually include:
• The subscription fee of a fund certificate is called the subscription fee paid by the Investor to the fund management company to cover expenses related to the issuance and issuance of fund certificates. This fee is payable only once upon issuance of the initial fund certificate or capital increase.
• Fund management fee is the fee that the Fund pays periodically to the fund management company to provide fund management services. Management fees are calculated as a percentage of the fund’s net asset value (NAV). Fees are calculated annually and paid to the fund management company monthly.
• In addition, usually investment funds have other types of fees such as:
• Supervision, custody … fees paid to the supervising bank
• Necessary expenses for the Fund’s operations (such as brokerage fee, fund asset valuation fee, remuneration of the Board of Representatives …), administrative fees
• Rewarding activities for fund management companies (if any).
Investors can track the fund’s investment activities through the following criteria:
1. Net Asset Value (NAV): The Fund’s performance is expressed through the Net Asset Value (NAV) that is periodically announced. Net Asset Value is usually posted on the website of Stock Exchange or on the Fund’s website.
2. Annual report: The annual report provides information about the Fund’s investment activities, divestments as well as profits and related activities as well as a business plan, profits. , development of the Fund in the near future.
3. Financial statements: Quarterly / annual financial statements show the performance as well as activities of the Fund such as investment in asset liquidation.
4. Reference index: The performance of the Fund can be compared with the effectiveness of the Fund operating the same type
It depends greatly on your investment objectives, risk appetite and other special requirements. These factors will often vary between investors. In fact, different funds require different levels of risk tolerance, depending on their portfolio structure and goals. Therefore, at GFM, we have a team of professional, dedicated investment advisors who are always ready to listen and talk to customers to learn more about their insights when investing, hence it is possible for us to accurately identify an appropriate individual investment strategy which is tailored-made for each investor.
When an investor wants to withdraw his/her capital, the investor only needs to submit a request to the fund management company. When an investor participates (buy) or withdraws (sell) in the fund, the buying/selling price is the value of the fund at the time of participation or withdrawal.
When investing in the stock market, like any other form of investment, there are always risks because of both subjective and objective reasons, such as the risks of fluctuations of stock prices, risks on liquidity when investors want to sell securities to collect money etc …
When a company raises capital, that capital needs to be divided into equal parts called shares. The buyer called shareholder equity. Shareholders are issued a share ownership certificate called a stock and only Joint Stock Company can issue the stock. Thus, the stock is a certificate proving the ownership of a shareholder for a joint stock company and a shareholder whose shares are expressed in shares ….
The shareholders of ordinary shares have the rights and responsibilities for the company such as: Receive dividends according to business results; To vote, to stand for election to the management and control apparatus of the company; And must be responsible for losses or bankruptcy corresponding to his capital contribution.
A bond is a form of debt in which the buyer of the bond acts as a creditor for a company, a city, a government, and these debtors will be committed to paying you back in full plus the debt. interest. A city can sell bonds to fund public works, while the government issues bonds to fund their debts.
Bonds are often preferred for their stability over stocks. When investors are afraid of the volatility of the stock market, they will choose a safe solution is to invest in bonds. Of course, bonds are not absolutely safe. There is still a certain risk ratio with bonds when debtors are unable to pay. Some businesses rated low credit capacity often tend to pay high bond interest. In contrast to the government, the bond interest rates are usually not high, but they are guaranteed better on the risk. Even US government bonds are considered “absolutely safe”.
The stock market is a place where investors trade, buy and sell stocks of enterprises.
For businesses, the stock market is a channel to raise capital outside bank loans. Enterprises issue shares to raise capital for their business activities and projects.
For stock investors, the stock market is where they can buy stocks and participate in the growth process of the company. They can realize profits by selling that stock when prices rise.
For private companies, shareholders are often the founders and the first investors. They can sell shares on the stock market and make a profit from creating that company and business. That case is called the primary market.
For investors who own publicly traded stocks in the stock market, they can participate in the growth process of the company without having to waste effort on establishing their own companies. This is called a secondary market.
Currently, there are many investment channels in the market to help investors increase their assets. Common investment channels in Vietnam such as: savings, real estate investment, investment in gold purchases, investment in the foreign exchange market (Forex), investment in the stock market, investment in funds, etc.