Saturday, November 17, 2007

Manulife takes on investor education in Vietnam

The company recently launched the third retail mutual fund in the market, which is targeting a December listing date.
Manulife Vietnam Fund Management Company is among the latest to test the waters in Vietnam’s nascent fund industry.

In July, the company launched the Manulife Progressive Fund. That was only the third closed-end, retail mutual fund to be offered in Vietnam and is expected to be listed in December. The fund didn’t quite meet the fund size the company was aiming for, raising only VND215 billion ($13.6 million) or just 85% of the target.

But for David Wong, general manager at Manulife Vietnam, that was a good enough start. Manulife started in Vietnam as a pure life operation eight years ago, and the fund company unit was formed in 2005. Initially, the fund company was formed to manage Manulife’s life assets, which amounts to around $220 million now.

“In 2006, we saw the changes in the stock market and the changes in the society, especially among the middle class. People were investing more, especially in the stock market and in real estate,” says Ho Chi Minh City-based Wong. “We felt that it was a good time to start our own retail mutual fund.”

Since mutual funds are such a new concept in Vietnam, Wong says he isn’t disappointed that the Manulife Vietnam’s first offering wasn’t fully subscribed.

“Retail investors in Vietnam still need a lot of education. We need to explain to them the difference between investing in stocks and mutual funds and explain to them the benefits of investing in a mutual fund,” he says.

As one of the first movers in Vietnam’s fund management industry, Manulife Vietnam is among the companies that have taken on the “huge responsibility” of investor education, Wong notes.

Vietnam is a young market. Retail investors are unaware of the other products
that could be available to them,” says Mark Canizares, Ho Chi Minh City-based investment director at Manulife Vietnam and manager of its first mutual fund.

“We have gone around the country to talk about the fund and mutual funds in general and you can see from the type of questions they ask that many of them are generally not yet ready to embrace investing in funds. Some were asking who would get the fund when they die, clearly mistaking the fund to be some kind of an insurance product,” he adds.

Wong says Manulife Vietnam’s fund is the company’s means of gaining experience in the local market.

“We had to start somewhere,” he says. “We need to get the experience, learn the process, and study the investment behaviour of retail investors.”

Manulife Vietnam has no immediate plans to launch another retail fund, and in the event that it does, it will likely be a sector-specific fund such as an infrastructure portfolio, Wong says.

The company is in talks with other fund management companies outside Vietnam for potential third-party fund management, and this is something Wong is keen on pursuing. He declined to elaborate as talks are ongoing.

“We have a local team here in Vietnam with local investment expertise. We know the rules and regulations. We have the backing of a global and regional discipline,” Wong says. “We think we are in the position to manage third party funds and offshore funds.”

Manulife Vietnam has six investment professionals, including Canizares. Wong says there are plans to expand the team, but he declined to give more details such as the number of new hires he expects or a timeframe for expansion.