Dragon Capital Vietfund Management (DCVFM) | Fund Factsheet

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Start your investment journey first by understanding the basics about investment fund

What is investment fund?

Investment Fund is the pool of money contributed by a range of investors who may be individuals or companies or other organizations, which is managed and invested as a whole, on behalf of those investors.

This investment fund is professionally managed by the fund management company and closely monitored by the regulators.

Why invest in fund

Investing in funds is often recommended to small investors who don’t have time and skills enough to invest themselves. Picking stocks requires a lot of research and calculate your risk carefully, whereas buying a fund allows investors to pool their money with others to access a range of investments and avoid putting all their eggs in one basket.

What is fund certificate

Fund certificates mean the securities issued by Fund Management company on behalf of Investment Fund, which certify lawful rights and benefits of investors with regard to the assets or capital of the Fund as counted in a proportion equal to the Fund’s unit contributed to the charter capital of Investment Fund by such Investors.

Type of investment funds

At present, there are many types of investment funds pursuant to the various classification criteria.

1. Base on capital mobilization:

  • Public fund:

The fund mobilizes capital by issuing it shares to the public. Investors may be individuals or institutions but majority of investors are individuals. Public fund provides an investment tools to investors in diversification of investment portfolio, risks minimization and cost efficiency high due to high professional management skills.

  • Member fund:

The fund mobilizes capital by issuing only to a group of small investors, who can obtain the priority to buy first, individuals, other financial institutions or large corporations, thus the liquidation of this fund is less than the public fund. Investors in such a fund usually invest with a large amount of capital, which allows them to obtain much greater control in the fund investment.

2- Base on the structure of capital mobilization:

  • closed – end fund: means a public fund whose fund certificates, upon having been offered for sale to the public, shall not be redeemed as requested by investors.

In order to create the liquidity for this type of fund, after the end of the issuing period (or close the fund), the fund certificates will be listed on the stock market. Investors can buy or sell the certificates to obtain the capital gain from stock certificates or their investments through secondary market. Total capital mobilization of funds is fixed and not changed during the fund operations.

  • Opened – end fund:

Unlike the closed-end fund, the total capital of the fund changes in daily transactions because of the specific nature of the fund since the fund management is required to redeem or sell the fund unit per investors’ requests with the rate at the trading time. For this type of fund, fund certificates are not listed on the stock market. Due to the demands of high liquidity, the form of opening this new fund exists only in countries where the economy and stock market have developed.

3- Base on the organizational structure and operation of the fund

  • Investment as company

In this model, the investment fund is an institution, a form of a company regulated under the law in each country. The highest power of the fund is the board of directors, voted by investors. This Board’s main mission is managing the entire operation of the fund, selecting fund management company and monitoring investment activities. This type of company also have the right to replace the fund management agency if its capability is not strong enough. In this model, the fund management acts as an investment consultant, responsible in conducting investment analysis, asset allocation and other corporate governance. This fund model has not been available in Viet Nam as stipulated by the SSC.

  • Investment as a contract:

This is a model of trust fund investments. Unlike form of investment fund as a company, this pattern of investment funds does not form a legal entity. Fund management companies establish a fund, conduct the capital mobilization and implement the investment objectives as stated in the fund charter. In addition, the custodian bank plays an important role in capital preservation; relationship between the fund management and the custodian bank is a contract which stipulated the rights and obligations of the two parties in implementing, monitoring and protecting the investments. Investors who contribute capital to the fund (but not a shareholder in the investment fund company) and entrust their capital to the Trust investment company in order to ensure the highest possibility of return.