Fund managers fail to push up net asset values

Analysts had predicted last month that share prices would increase as June 30 approached and fund management companies pushed to increase the net asset value of their portfolios. In the end, the prognostications failed to materialise.

Gains or losses in the net asset value (NAV) of a fund is taken as a basis for evaluating the effectiveness of the fund during the period. However, only closed-end funds with a fiscal year ending June 30 had any impetus to increase their net asset value by that day.

Only four out of 33 funds had a fiscal year ending last month: Vietnam Holdings Ltd, Vietnam Opportunity Fund Ltd, and two funds managed by Dragon Capital, Vietnam Infrastructures Ltd and Vietnam Property Fund Ltd.

“Their portfolios demonstrated that there was no appreciation of net asset value during the period,” said Nguyen Khoa, an analyst for financial information firm stox plus.

“The total value of listed stocks accounted for only $200 million of the NAV of these funds, while they were managing billions of dollars. Therefore, there was little indication that investment funds had manipulated share prices on the market,” said Khoa.

The funds also had few holdings in common, he said, noting that, of the 20 shares held by the four funds in the largest proportion, only Vinamilk (VNM) and PetroVietNam Drilling (PVD) were held by at least two different investment funds – and none occupied more than 5-6 per cent of their portfolios.

“As a result, there was no basis for any possibility of the funds colluding to push up share prices in an effort to improve their net asset values,” Khoa said.

Of the top 10 shares held in the greatest proportion by a single fund, the Vietnam Opportunity Fund, four stocks – VNM, Eximbank (EIB), freight forwarder Vinalink (VNL) and steel producer Hoa Phat (HPG) – totalled a combined 18.5 per cent of the fund’s portfolio. If the fund had somehow pushed share prices up by 20 per cent, the fund’s overall NAV would have only increased by 3.7 per cent.

“So, even if it could have succeeded in manipulation, the result would have been minor,” Khoa said. — VNS

Tags: Vietnam Fund manager