Fund manager MB Capital, a subsidiary of Military Bank, has become the first fund in Vietnam to apply to the State Securities Commission for a licence to establish an open-end bond fund.
The application was submitted on August 30 and, if approved, would make the Military Bank Bond Fund (MBBF) the first of its kind in Vietnam.
The MBBF would focus on government bonds, secured corporate bonds and term deposits, with Japanese investors expected to contribute 30-40 per cent of the fund’s initial capital.
The fund’s goals would be to achieve higher earnings than interest paid on bank deposits, with low risk to investor capital. MB Capital planned to conduct roadshows and offer fund certificates to the public after receiving approval from the State Securities Commission.
The fund was also expected to help local investors gain improved access to the domestic bond market in a professional manner, said MB Capital general director Phan Anh.
The legal framework for open-end funds, issued in late 2011 by the Ministry of Finance, was expected to boost market liquidity and the number of institutional investors. However, market insiders have urged regulators to further address the issues of tax rules, foreign ownership limits in open-end funds, and the accounting regime for these types of funds.
High tax rates on fund income, currently 25 per cent, were a big concern for investment funds, Anh said, urging regulators to issue tax incentives to encourage investors and promote this form of investment channel on a wider scale.