The number of securities trading accounts in Vietnam surpassed 8 million by mid-2024, reflecting the growing appeal of equities as a mainstream investment channel. Yet despite this surge in retail participation, one investment product widely considered both safe and effective remains relatively overlooked: mutual funds (fund certificates).
Understanding Fund Certificates
A fund certificate represents an investor’s ownership in a collective investment scheme managed by a licensed fund management company. Instead of directly buying individual stocks or bonds, investors contribute capital to the fund, which is then invested into a diversified portfolio of securities. Each investor owns a proportional share of that portfolio.
Mutual funds are often viewed as an ideal solution for busy individuals or those lacking deep financial expertise. They offer professional management by experienced fund managers and help mitigate risks compared to direct, self-directed trading. While short-term performance may vary, long-term returns from mutual funds in Vietnam have generally been positive.
Why Funds Matter
One of the greatest advantages of mutual funds is risk diversification. Under regulations set by the State Securities Commission of Vietnam (SSC), no single stock may account for more than 20% of a fund’s value. Furthermore, fund assets must be safeguarded by independent custodian banks, ensuring both security and compliance.
Globally, the role of funds in financial markets is significant. According to Boston Consulting Group, the global asset management industry reached USD 98.3 trillion by the end of 2023, equivalent to 98% of global GDP in 2022. Data from the International Investment Funds Association shows that open-ended funds and ETFs accounted for USD 63 trillion, or nearly 63% of global GDP.
In contrast, Vietnam’s fund industry remains in its infancy. As of April 30, 2023, total assets under management by mutual funds amounted to VND 74.2 trillion, just around 1% of GDP—well below regional peers such as Thailand and Malaysia, where the figure reaches 30% of GDP. The investor base is also limited, with only about 300,000 retail investors, representing 0.3% of the population.
Barriers to Growth
Several factors explain why Vietnam’s mutual fund market has yet to flourish:
Investor Mindset – Many local investors prefer direct stock trading, driven by a desire for quick profits through market timing rather than long-term accumulation.
Limited Awareness and Trust – The fund management industry is relatively young, and investor education remains limited. Scams involving fake funds have also heightened skepticism.
Conservative Capital Flows – A large share of domestic savings still sits in bank deposits, as retail investors prioritize security and predictable returns over capital market exposure.
Distribution Gaps – Banks, which serve as the main distribution channel for mutual funds in many markets, are not yet licensed to sell fund certificates directly in Vietnam. Current distribution is largely restricted to fund companies themselves and securities firms—though the latter often prioritize brokerage services.
Cost Sensitivity – Some retail investors perceive fund fees as high, which discourages participation.
Accessibility – Many funds traditionally target high-net-worth clients, making it harder for small investors to participate.
Opportunities Ahead
Despite these challenges, Vietnam’s fund market holds significant long-term potential. In the government’s Securities Market Development Strategy to 2030, emphasis has been placed on strengthening institutional investors and expanding the mutual fund industry. This includes diversifying distribution channels, encouraging broader retail participation, and promoting a healthier balance between individual and institutional investors.
At a recent industry event, Deputy Minister of Finance Nguyễn Đức Chi emphasized the importance of developing institutional participation:
“Vietnam’s stock market capitalization is already large, with nearly 8 million investor accounts. But the proportion of institutional investors remains modest. Instead of 8 million individual accounts, it would be better if even half were institutional investors. This would lay the foundation for a more sustainable market.”
In short, while Vietnam’s mutual fund industry is still small, the path forward is promising. As investor awareness grows, regulatory frameworks evolve, and distribution channels expand, mutual funds are poised to play a much more central role in shaping Vietnam’s financial markets.
