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Bond funds stumble in slow gov't market

Update: October, 26/2013 - 09:38
Only MB Capital Viet Nam Bond Fund (MBBF) of the three domestic debt funds reported notable growth in the first seven months of the year, rising 5.9 per cent, equivalent to 10.1 per cent annual growth.— Photo tinnhanhchungkhoan

HA NOI (VNS)  — Domestic bond funds are struggling this year, with the Government's bond market showing no signs of revival.

Only MB Capital Viet Nam Bond Fund (MBBF) of the three domestic debt funds reported notable growth in the first seven months of the year, rising 5.9 per cent, equivalent to 10.1 per cent annual growth.

The two remaining funds reported low growth, even lower than the banking interest rate.

According to Dau Tu Chung Khoan, Vinawealth's VFF fund in the six-month period to October 8 increased by only 2.36 per cent – equivalent to an annual growth rate of 4.35 per cent.

Vinafund's VFB fund saw modest growth of 0.7 per cent after four months of operations – equal to an annual rate of only 2.1 per cent.

The funds' growth rates were far lower than the VN-Index, which has jumped 20 per cent since the beginning of the year, while equity funds have leaped by up to 35 per cent.

Low net asset value growth has led to investor caution, and some have withdrawn capital from the funds.

Statistics showed that the MBFF managed to raise only 375,000 bond certificates in comparison with its initial 5.4 million certificates. VFB's certificates fell by 1.5 million compared to the initial figure of 9.8 million.

Difficulties were forecast to continue in the bond market for the rest of the year, a fund director said, adding that there was little chance for further interest rate cuts before 2014, so the Government bond market would remain unappealing. — VNS

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