According to PHFM experts, the business situation of most businesses has reached the bottom in 2023, so 2024 will be a favorable opportunity for businesses to recover and develop in macroeconomic conditions with many positive changes.
Over 24 years of establishment and development, Vietnam’s stock market has made spectacular developments. Investment fund products have appeared, but in fact have not attracted great interest from individual investors.
At the Financial Street Talk Show on VTV8, Mr. Lu Hui Hung, General Director, Phu Hung Fund Management Joint Stock Company (PHFM) shared about the fund management industry as well as investment opportunities in the Vietnam stock market.
Ms. Khanh Ly – the Finance Talk Show: How do you assess the investment performance of funds in the volatile 2023?
Mr. Lu Hui Hung, General Director, Phu Hung Fund Management Joint Stock Company (PHFM)
In 2023, the difficulties of the fund management industry were gradually removed, many open-ended funds have recorded higher growth in business performance than the market average thanks to their acumen in seizing growth opportunities and portfolio risk management. While the VN-Index ended 2023 growing at 12%, some open-ended funds recorded significantly higher growth than the VN-Index; Some open-ended funds even have a return of over 30%. According to information from the Vietnam Securities Depository and Clearing Corporation (VSDC), the number of participating funds as well as the frequency of transactions in 2023 have all recorded an increase, especially open-ended funds. I am very optimistic about the future development of the fund management industry in Vietnam. I expect the fund management industry not only to increase in quantity but also in quality to increase in the near future, products related to the fund industry are more and more abundant, meeting many risk appetites as well as bringing higher efficiency to investors.
Why are investors in Vietnam not interested in the fund, even though the performance is quite good?
I suppose there are many reasons. The first reason may be that investors are not fully updated with information about the fund industry. For example, they lack information about the different types of funds, the benefits that come with them, or wonder if their money is safe?… Individual investors may also be dissatisfied by the fees and costs associated with some funds, causing hesitancy in investment decisions.
The second reason is psychological and behavioral. There are many individual investors who are influenced by unofficial sources of information or misleading advertising. They may face difficulties in accessing reliable sources of financial advice and guidance. Retail investors are also influenced by emotions, prejudices, and preferences when making investment decisions. Currently, individual investors do not really care about their risk tolerance, timing and investment goals. Therefore, they are less interested or impatient enough to think about which solutions from which funds might help them.
The third reason can also stem from the side of funds, many of which target customers with high net worth, so retail investors do not have access to them.
In your opinion, after the recent period of intense market volatility, have investors changed the way they view funds?
After experiencing market fluctuations, investors will also understand that it is difficult to get sustainable profits in the market without knowledge and experience of the market. At the same time, they will also seek and access reliable sources of financial advice and guidance. In fact, getting sustainable returns in the market requires time, expertise, and resources. And most investment funds have all these factors, as well as a variety of solutions to meet investors’ risk appetites.
Big investors, especially investment funds that have appeared in Vietnam for a long time, we can see that the fund industry is growing more and more, but this number compared to other countries in the region and developed countries, the potential is still very large?
That’s right! Total assets under management (AUM) of the entire fund management industry by the end of 2022 reached only 23.25 billion USD, equivalent to 5.7% of GDP, much lower than other countries in the region. Meanwhile, in 2017, in Thailand, this rate was 27.93%, or Malaysia was 31.57% …
The development of the Fund industry is highly correlated with the development of the stock market. Currently, GDP per capita in Vietnam is about 4,000 USD. Based on experience in other countries such as Thailand, when their GDP per capita surpasses $5,000, the need for financial investment increases significantly. At the same time, this trend will accelerate the development of the Fund industry.
Besides, up to now, the ratio of stock trading accounts to the total population in Vietnam is about 7.5%, while this figure in other countries in the region is larger, even up to 92.1%. In particular, the percentage of fund certificate accounts opened is less than 1% of the population as of 9/2022. Thus, the increase in the number of trading accounts along with the development of the financial market will bring large capital to the stock market, attracting more investors to know and choose the fund as one of the investment tools.
In 2024, there are still difficulties and challenges, from the perspective of funds, how do you assess the economy and the stock market?
Although it is forecasted to continue to face many difficulties and challenges, Vietnam’s macroeconomic and stock market in 2024 are expected to have a brighter color gamut than in 2023, thanks to the support of many positive factors. For the macroeconomy, Vietnam’s economic environment in 2024 is forecasted to remain stable and less volatile, with the expected economic growth rate at over 6% compared to 5% in 2023. In addition, the interest rate level as well as the exchange rate will also be operated at a stable level. In addition, the Vietnamese government has also made a number of moves to loosen fiscal policy, thereby promoting economic growth. Moreover, the recovery in global trade growth will also be very beneficial for an exporting country like Vietnam, supporting improvements in domestic consumption and production and business activities.
For the stock market, because the business situation of most businesses has bottomed out in 2023, 2024 will be a favorable opportunity for businesses to recover and develop in macroeconomic conditions with many positive changes. In addition, VN Index’s P/B is currently only 1.8x, about 22% lower than the 10-year average P/B (2.2x). For the above reasons, I very much expect the stock market in general to offer attractive returns in 2024.
In developed markets, the role of investment funds is very large, so in your opinion, it is necessary to implement more solutions to promote the development of the fund industry, thereby supporting investors, as well as promoting the market development in the future?
In my opinion, to promote the fund industry, we must first let the general public understand this product. We hope that fund products will not only be invested by high-net-worth investors, but be utilized by those with an average income level to achieve their financial goals in life. The minimum investment threshold of our fund is only 100,000, which is lower than the industry average. We hope to make our products more accessible to general investors. In addition, we encourage investors to hold for a long time, so we have canceled the subscription fee. As long as investors hold for a long enough period, they do not need to pay redemption fees either. We hope our solution becomes more accessible to investors in general. In addition, we are planning some educational activities, including both digital contents and some investment seminars for investors and at universities, to provide investment knowledge to future generations of investors.
Source: Market Times