Viet Nam's exchange-traded fund (ETF), VFMVN30, was officially listed on Monday on the HCM City Stock Exchange.— Photo baomoi

HA NOI (Biz Hub) — Viet Nam's exchange-traded fund (ETF), VFMVN30, was officially listed on Monday on the HCM City Stock Exchange, with about 20.2 million shares valued at more than VND10,000 (US$0.47) each.

Bao Viet and HCM City securities companies created the ETF, the first domestic open-end fund in Viet Nam tracked by the VN30 Index, with supervision from the Vietnam Standard Chartered Bank Ltd and under the management of the Vietnam Fund Management Company (VFM).

The ETF shares, with a price margin that is within 20 per cent, represent the performance of the 30 largest stocks in HCM City. Each stock has a certain percentage in the portfolio, with the highest belonging to property giant Vingroup with 11.07 per cent, followed by Vinamilk with 10.32 per cent, private equity group Masan's with 9.12 per cent and Sacombank with 8.03 per cent.

The ETF's opening is expected to solve problems related to the foreign ownership of shares, as it grants unlimited ownership of shares to foreign investors, who are restricted to only 49 per cent of closed-end funds.

The VFM has mobilized a registered capital of VND202 billion ($9.6 million) for the fund's initial public offering, thereby doubling its target of VND100 billion ($4.76 million).

Although the fund's scale is still much smaller than that of the total assets of two foreign ETFs, including The Market Vectors Vietnam ETF and DB X-Tracker FTSE Vietnam, its registered capital is $10 million to $7.5 million higher than that of The Market Vectors's initial start and $5.3 million higher than that of the FTSE. 

Brokerage Services Manager of Hanoi Dong A Securities Quach Lan Anh told Bizhub.vn on October 6 that the opening of the domestic ETF at this time is compatible with the high potential of growth in the short term.

As for the long term, Lan Anh said the growth was estimated to be equal to the stock market's general growth. Since the beginning of this year, the VN30 Index has increased from 550 to 660 points, while the VN Index has risen from 500 to 618 points. 

"The stock market has been posting satisfactory results in the third quarter of this year. The VN30 Index and VN Index are expected to rise between 30 and 50 points between now and the end of this year," said Lan Anh.

ETF investments are different from normal savings deposits. The depositors who do not want to receive small interest from savings, can expect a bigger profit from their investments in the ETF VFMVN30, which has good liquidity, and from the market's good growth capacity.

However, Lan Anh said that the ETF shares will also be impacted by the market's supply and demand and will change along with the market's ups and downs.

"High risk, high return. Investment in ETF shares is not the best choice for active and adventurous investors. However, in my opinion, ETF is a better method of saving money at a time when the banks' interest rate has been continuously reducing and credits are in excess," said Lan Anh.—VNS