Two new investment funds proposed for wider range of capital mobilization

The State Securities Commission of Vietnam (SSC) has proposed to introduce two new investmnet funds aimed at expanding investment opportunities and mobilizing medium- to long-term capital for the economy.

They include Infrastructure Bond Investment Fund and the Money Market Instrument Investment Fund, according to the SSC.

In a draft proposal for amending and supplementing certain provisions of the Ministry of Finance's Circular No. 98/2020/TT-BTC on guiding the activities and management of securities investment funds, the SSC proposes that the Infrastructure Bond Investment Fund be a closed-end fund, while the Money Market Instrument Investment Fund operates as an open-end fund. Both products are regulated under the Securities Law 2019.

As a closed-end fund, the Infrastructure Bond Investment Fund is  investing in bonds issued for infrastructure development, government debt instruments, government-guaranteed bonds, local government bonds, deposits, and certificates of deposit, with an investment ratio of at least 65% of the net asset value in these assets. The closed-end fund will allow investors to flexibly transfer fund certificates when necessary without affecting the fund's capital size.

Regarding the Money Market Instrument Investment Fund, the SSC proposes applying the open-end fund model to meet the needs of investors seeking to optimize short-term idle capital. This model also allows the fund to widely mobilize capital from public investors and enables investors to flexibly buy and sell fund certificates. This form is also adopted by many countries for money market instrument investment funds.

The draft proposes that the fund's permissible investment portfolio includes deposits, certificates of deposit, government debt instruments, government-guaranteed bonds, local government bonds, listed corporate bonds, and other money market instrument investment fund certificates. 

The fund must invest at least 80% of the total net asset value in deposits, certificates of deposit, government debt instruments, and other fixed-income assets with a remaining maturity of no more than 12 months, except for government debt instruments. This ratio is based on international experience, such as Malaysia and Hong Kong (China), which currently set a similar ratio at around 90%.