Investment Fund is a form of investment which is simple and convenient for mid-term and long-term investors. When involved in an investment fund, investors will contribute some of their investment to a fund managed by professional fund managers. The fund managers will use the capital from this fund to invest in bonds, stocks and/or other debt instruments in the money market in order to achieve goals set by the Fund. Investors are not directly involved in the investment decisions. In other words, this is a form of capital investment in the fund management company.
Fund management company is a type of financial intermediary organizations, specialized in establishment and management of investment funds for the needs of medium and long term investment. In Vietnam, Fund management company is licensed and monitored by State Securities Commission. According to Clause 1, Article 59 of the Securities Law, Fund management companies are organized in the form of a limited liability company or a joint stock company in accordance with the Enterprise Law. In particular, investment fund's asset is independent of the company's and other funds' managed by this company. This feature ensures investment fund activity to be in compliance with investment objective, not influenced by other benefit of the fund management company.
Investment experience shows, usually individual investors have no experience in stock markets, as well as gold or foreign currency channels will not likely have long-term capital. So often they endure high risk when market volatility.
In reality, 95% of individual investors lose, majority of profit belong to the fund. So investing through investment fund is suitable for those who do not have experience as well as the time to analyze market regularly.
Fund management companies comprises experienced professionals that make investment decisions through in-depth market research and analysis.
Invesment funds are monitored by the State Securities Commission, banks, audit firms. Also public fund's NAV is published regularly and transparently.