1. Current status and the need to develop the fund-management industry in Vietnam
Vietnam’s fund-management industry has grown rapidly over the past decade but remains modest relative to its potential. Total assets under management (AUM) rose from about VND 100,000 billion ten years ago to about VND 639,000 billion at the end of 2023, and further to more than VND 742,000 billion at the end of 2024 — seven times the 2014 level. Forty-three fund-management companies currently operate 123 securities investment funds, yet total industry AUM accounts for only about 6–7% of GDP (of which public funds are only about 0.8% of GDP), far below Thailand (over 20%) or Malaysia (about 60%).
Scale and structure: Industry AUM grew at an average of about 20% per year over 2014–2023, and the number of funds has doubled since the end of 2020. The market is now fairly diverse: open-ended funds (including equity, bond and balanced funds), ETFs, member funds, closed-end funds, voluntary pension funds, and even a pilot real-estate investment fund. Many large funds such as the VN30 ETF and DCVFM VN Diamond have reached NAVs in the thousands of billions of VND; open-ended funds and ETFs alone account for about 86% of total net asset value thanks to their high liquidity.
Individual investors: Although the number is rising fast, only about 300,000–400,000 accounts invest through funds (0.3% of the population), compared with more than 7.3 million individual securities accounts. Open-ended fund assets at the end of 2024 reached only about VND 53,000 billion, less than 1% of GDP. Most investors still trade short-term on their own, while funds — oriented towards the medium and long term — have yet to attract strongly.
Market share and capital flows: Nearly 90% of the industry’s assets come from institutional mandates (mainly through insurers), allocated chiefly to bonds and deposits. Of this, foreign funds operated by Vietnamese managers account for about VND 592,000 billion of AUM (end-2023), with 71% invested in bonds (mostly government bonds) and only 17% in equities. By contrast, some 110 domestic funds have a total net asset value of only about VND 74,000 billion (mid-2024), with 78.5% in equities and 16.2% in bonds. This shows that domestic individual capital flows remain very limited, while most fund-managed assets are institutional capital — especially foreign — mainly invested in fixed-income assets.
Chart 01: Total assets (AUM) of foreign investors managed by licensed domestic fund-management companies
Chart 02: NAV scale of domestic funds
Source: FiinGroup
Vietnam’s fund-management industry has grown rapidly over the past decade but remains very small relative to the country’s medium- and long-term capital needs and its household savings potential. Most capital flows from households to enterprises still pass mainly through banks, while the credit-to-GDP ratio has reached about 134%, placing heavy pressure on the traditional credit channel.
Amid growing long-term capital needs for infrastructure, industry, technology and energy, investment funds, pension funds and ETFs can become a source of medium- and long-term capital alongside banks — both mobilising idle capital in the population (currently held mainly in savings, gold and foreign currency) and reducing the burden on the credit system. The development of funds also creates a force of long-term, professional investors, helping to reduce stock-market volatility, attract foreign capital and support the goal of upgrading the capital market.
Funds can also channel capital into priority areas such as infrastructure, renewable energy, technology and industrial real estate — especially as Vietnam needs to mobilise about USD 245 billion for infrastructure over 2025–2030, while the state budget can meet only about 70%. In addition, many domestic funds have proven their effectiveness: over the past three years, when the stock market rose less than 10% per year, many equity funds achieved 12–17% average annual returns — even double the general index — while many bond funds achieved over 7% average annual returns, about 2 percentage points above the prevailing savings rate. This shows that investing through funds delivers attractive long-term yields for investors while creating a positive capital cycle into production and business, contributing to sustainable growth.
2. Challenges facing the fund-management industry
Despite rapid growth, Vietnam’s fund industry still reveals several major bottlenecks that must be removed for it to truly become a long-term capital channel for the economy.
First, on behaviour and awareness, most people still prefer bank savings, holding gold or investing in real estate; the rest tend to trade equities themselves rather than entrusting capital to funds. Only about 0.3% of the population — equivalent to 400,000 accounts — invests through funds, while individual securities accounts have exceeded 7.3 million. Financial education and communication about the benefits of fund investment are not strong enough, and comparing fund costs and performance is inconvenient due to the lack of a centralised information portal.
On products and supply capacity, the market currently consists mainly of equity funds, bond funds, a few ETFs and small voluntary pension funds, along with a few pilot real-estate funds. There is an absence of infrastructure funds, domestic REITs, money-market funds and international ETFs. Governance and disclosure capacity varies across fund-management companies; benchmark indices and performance-comparison standards have not been standardised. Scale is also modest in terms of the AUM/GDP ratio, as noted above.
The distribution channel remains the biggest “bottleneck”: fund certificates are currently sold mainly through securities firms or directly by fund-management companies, while commercial banks — the main distribution channel in many countries — are not yet permitted to sell them. Fintech platforms such as Finhay and Infina, though growing fast, still lack a regulatory sandbox to scale up to the mass market.
Institutions and tax incentives remain limited: the legal framework for new products such as thematic ETFs, infrastructure funds, pension funds and money-market funds is not flexible enough. Tax incentives for long-term investment and voluntary pension funds are unattractive compared with Thailand’s LTF/RMF (Long Term Equity Fund/Retirement Mutual Fund) models or Malaysia’s PRS (Private Retirement Scheme), making it hard for funds to compete with traditional investment channels.
The supply of investable assets is also thin: although equity market capitalisation reaches about 65% of GDP, there are not many large, transparent listed enterprises; after the 2022–2023 crisis, the corporate-bond market has limited high-quality supply, and mechanisms to securitise cash flows from infrastructure/PPP projects remain unclear, reducing the opportunity to form large-scale infrastructure funds.
According to FiinGroup, at the end of 2023, the investor structure in the capital market depended heavily on banks: foreign investors held only about 14% of listed equities, while commercial banks accounted for as much as 43% of corporate-bond outstanding balances, and non-bank institutions such as investment funds, insurers and pension funds only about 9%. Voluntary pension funds numbered only about 10, of very limited scale; Vietnam Social Security is not yet permitted to invest in equities or corporate bonds; and foreign investors in the corporate-bond market held under 3% of the outstanding balance due to a lack of transparency and valuation tools. Compared with Thailand and Malaysia — where pension funds and bond mutual funds are allowed to invest in investment-grade corporate bonds (≥BBB) — Vietnam clearly still has a large gap in policy and market infrastructure.
These are important bottlenecks to remove if Vietnam wants the fund-management industry to genuinely serve as a medium- and long-term capital channel alongside the banking system.
To overcome these bottlenecks, Vietnam can draw on the experience of markets that have turned their fund industries into pillars of long-term capital.
- United States, United Kingdom: Fund assets equal 133% of GDP (US) and ~78% of GDP (UK), thanks to mandatory/voluntary pensions (401k, ISA), a strict legal framework (Investment Company Act 1940) and wide distribution through banks and securities firms.
- Australia: The mandatory Superannuation system (11% of income) has helped pension funds reach ~145% of GDP, providing a large source of long-term capital for enterprises.
- South Korea: More than 1,100 ETFs with AUM of ~USD 90 billion; banks and securities firms jointly distribute fund certificates, combined with financial education and data transparency to attract individual investors.
- Singapore: Fund assets exceed SGD 3,300 billion thanks to the CPF and SRS models and a new legal structure (VCC 2020). Singapore both encourages domestic strength and attracts foreign funds to establish headquarters.
- Malaysia, Thailand, India: EPF & PRS (Malaysia) lifted AUM to 60% of GDP; LTF & RMF (Thailand) created a long-term investment culture; India has 160 million SIP accounts thanks to tax incentives + fintech + financial education.
Accordingly, successful countries all converge on four factors: a favourable institutional framework – tax incentives – product diversity – wide distribution channels, combined with transparency and financial education to build trust. These are the “keys” Vietnam can selectively adopt.
3. Proposed solutions to develop Vietnam’s fund industry
For the fund-management industry to truly become a key medium- and long-term capital channel for the economy, Vietnam needs an overall roadmap with coordinated actions from regulators, fund-management companies and the investor community.
- On the side of regulators and policymakers, the first priority is to complete the legal framework and incentive mechanisms. To break through, it is necessary to review and remove legal barriers, simplify licensing procedures for establishing funds, and standardise risk-management regulations, reporting obligations and information transparency in line with international practice. Tax policy should become a “boost” for demand: exempting or reducing personal income tax on long-term investments, for instance in voluntary pension funds or periodic investment models such as SIP (Systematic Investment Plan), which helped India attract more than 160 million accounts. Another important solution is to allow commercial banks — which own extensive branch networks and large deposit-customer bases — to distribute fund certificates. The experience of South Korea and Thailand shows this can quickly expand the base of fund investors.
- Under Decision 3168/QD-BTC on the Scheme to restructure securities investors, the Ministry of Finance aims to diversify the investor structure, particularly to rapidly increase the proportion of institutional, long-term and professional investors in both the equity and bond markets. The scheme emphasises strongly developing public investment funds — including open-ended funds and voluntary pension funds — as the core force of the long-term investor group. At the same time, it encourages large domestic institutions such as insurers, pension funds and institutional investment funds to increase their allocation to equities and corporate bonds, alongside completing mechanisms to attract foreign investors, tied to the roadmap for upgrading the stock market and improving the sovereign credit rating. To realise these goals, the Ministry of Finance plans to use various policy tools: designing tax incentives for long-term investors, expanding fund-certificate distribution channels — especially allowing commercial banks to participate — and completing a regulatory sandbox for fintech, licensing technology platforms such as Finhay and Infina to distribute funds transparently and under control. The scheme expects that, in the coming years, the proportion of capital raised through funds and professional institutions will increase strongly, thereby gradually reducing dependence on the banking system for supplying medium- and long-term capital to the economy.
- In parallel, developing “investable assets” is also essential: completing a transparent corporate-bond issuance mechanism, allowing commercial banks to act as Collateral Asset Management Agents, and permitting the securitisation of cash flows from infrastructure/PPP projects to create long-term assets for funds.
- On the side of fund-management companies, the central task is to expand products and services to meet investors’ diverse needs. The market still revolves mainly around equity funds, bond funds and a few ETFs. New funds should be launched soon, such as thematic ETFs (ESG, technology, consumption), infrastructure funds investing in PPP bonds to help mobilise about USD 245 billion for the 2025–2030 infrastructure phase, or private-equity (PE) and venture-capital (VC) funds channelling capital to innovative startups. At the same time, cooperation with international funds should be encouraged to establish feeder funds — “satellite” funds that raise domestic capital to invest abroad — to diversify opportunities and bring global product standards to Vietnamese investors. Alongside this is the development of wealth-management services, offering flexible discretionary-investment packages for the fast-growing middle class.
- Enhancing governance capacity and transparency is also a matter of survival. Fund companies need to raise charter capital, invest in information technology, and apply big-data analytics and artificial intelligence (AI) to improve portfolio-management quality. They must also periodically disclose indicators such as NAV (Net Asset Value), portfolio holdings, management fees (TER – Total Expense Ratio) and performance against benchmarks, providing a basis for investors to compare transparently. The formation of independent fund-rating organisations, similar to the global Morningstar model, should also be promoted to reinforce public confidence. Fund companies themselves need to proactively build multi-channel distribution strategies — partnering with banks, securities firms and fintech platforms — while organising financial-education campaigns and encouraging periodic investment like India’s SIP model.
- On the side of investors and industry associations, changing to a long-term investment mindset is the key factor. Instead of only short-term trading, investors need to learn to allocate assets by objective: from money-market funds and bond funds to balanced funds and equity funds. Using centralised data portals and tools to rate and compare costs will help select transparent, low-cost funds that closely track benchmarks. The fund industry association also plays an important role in issuing a code of conduct, building a portal to compare fund performance, and organising public financial-education programmes, thereby spreading knowledge and reinforcing public confidence in this investment channel.
When all three groups — regulators, enterprises and investors — act together, the fund-management industry will mobilise the vast idle capital in the population, ease the burden on bank credit (already at about 134% of GDP), and become a sustainable source of medium- and long-term capital supporting the growth of infrastructure, technology and energy, bringing Vietnam closer to the goal of building a multi-pillar financial system that approaches the standards of regional financial centres.
4. Conclusion – A golden opportunity for the fund industry to “take off”
The rapid rise of the population segment able to accumulate financial wealth, the long-term capital needs of infrastructure, and the goal of upgrading the capital market are opening a “window of opportunity” over the next two to three years for Vietnam’s fund-management industry. If the solutions are implemented in a coordinated way — from opening distribution channels through banks and fintech platforms, tax incentives for periodic-investment models (SIP) and pension funds, and product diversification, through to standardising information transparency — the AUM/GDP ratio could well approach 10–12% within five years, making funds a source of medium- and long-term capital alongside the banking system. At that point, millions of people will not stop at the traditional savings channel but will also invest periodically through funds, helping the vast pool of household capital flow into production and business through professional funds, contributing tangibly to sustainable growth. This is the golden moment for Vietnam to build a multi-pillar financial system that approaches the standards of regional financial centres.
Source: Dau tu Chung khoan
Author:
- Nguyen Thi Lan, CFA – Head of Portfolio Management, PVI Asset Management JSC.
- Nguyen Thu Binh, FRM, CIA – Head of Risk Management, PVI Asset Management JSC
