Fund management companies in Vietnam had a tough 2013 as investors were reluctant with their capital that got stuck in a sluggish economy that grew less than target for the third straight year in a row.
Last year the ratio of total investment for social development over GDP, estimated at 5.42 percent, declined to 30 percent from 40 percent the previous year.
Only a small number of investors were optimistic about the market and newcomers were cautious, news website VnExpress quoted a securities specialist named Quach as saying.
News has circulated since late last year that the government is set to lift foreign ownership limits at local firms, which is expected to brighten the market's outlook.
But only the banking sector has so far been allowed the relaxations in only a few specific categories including the ownership of strategic foreign investors rather than total foreign ownership, currently set at 30 percent.
According to the Ministry of Finance, six out of Vietnam's 47 fund managers had either dissolved or been put under special control by securities authorities due to troubled finances as of the end of last year.
The figure climbed to seven early this year when securities authorities ordered the Hanoi-based Minh Viet to cease operations.
Less than half of the rest had reported profits as of the third quarter's end last year.
Nguyen Viet Duc, director of fund manager SHF, said the investment management sector is facing difficulties and will not recover this year.
He said close-ended funds are no longer popular in Vietnam while open-ended ones, which received government permission to operate in early 2012, will not flourish for another few years.
Unlike securities firms, fund managers cannot look for other sources of income like service fees, he added. In fact, stock firms also had a bad year as 60 percent of Vietnam's 94 such businesses posted losses last year.
An executive from the State Securities Commission said there is a large gap between strong and weak businesses in the industry as bank-run firms with strong financial capability are beating out their weaker rivals.
He said competition remain fierce since the number of existing securities investment firms is still large, adding that the sector only needs three to five effective businesses.
The securities commission is considering tightening operational rules for the fund management sector, he added.
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