VietFund Management has launched Vietnam’s first domestic exchange-traded fund (ETF). The fund, VFMVN30 ETF, is expected to be listed in September on the Ho Chi Min City Stock Exchange (HOSE).

Tran Anh Tuan, director of business development at VietFund Management, told SRP that foreign institutional investors will have full exposure to the Vietnamese listed stocks through the newly launched ETF, unlike the other two foreign Vietnam focused ETFs listed on the local exchange.

The Vietnamese government currently has limits in place for foreign direct ownership of listed stocks, ranging from 30% to 49% depending on the type of business.

The VFMVN30 ETF tracks the performance of the VN30 Index, which consists of 30 HOSE-listed stocks screened for free float, market capitalisation and trading value. VFMVN30 ETF offers higher tracking efficiency and diversification as it represents 60% of the VN30 Index market cap and 50% of its daily trading volume.

“Some brokerage firms in the local market have also shown interest, however the priority at this stage will be to educate the local investors who are very new to tracker products,” said Tuan. “We are currently at planning stage for this.”

Leverage/Inverse
As local law prohibits investment funds from using leverage components in their structures, the firm will focus on passive strategies. “A market for derivatives does not exist in Vietnam yet,” said Tuan. “We never rule out any opportunities to develop new products, such as synthetic or leveraged ETFs in the local market, however, as the legal framework develops slowly and prudently, we do not expect to have a sound legal foundation for these new types of ETFs in the foreseeable future.”

According to local media, HCM City Securities and Bao Viet Securities have agreed to buy creation units worth VND30bn ($1.3m) and VND20bn ($932,953) respectively. Furthermore, Tran Thanh Tan, chief executive officer of VietFund Management, also said the initial offering has raised more than VN50bn ($2.3m) from other institutional and high-net-worth individual investors.

VietFund Management is the first fund management firm that was established in Vietnam, founded in 2003. It provides diversified financial products and services to local and foreign investors through funds and portfolio management services. The firm is not authorised to provide structured products at the moment.

The market for structured products is still at a very early stage in Vietnam and only a handful of foreign banks such as ANZ Bank, Standard Chartered and HSBC are active in the market. In the retail space, HSBC Bank is currently active in providing structured deposits to local investors. Some of the current offers of HSBC Bank Vietnam include products linked to AUD/USD featuring digital payoff types with tenors of up to three months.

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