Retail investors feel headaches finding a suitable investment channel

Retail investors feel headaches finding a suitable investment channel

Difficulties in finding a “suitable basket”

Besides enjoying the interest income from their bank deposit, the family of D.N. who lives in Ho Chi Minh City’s Go Vap district has chosen to invest in some good tickers in the stock market.

Last year, his family reaped a considerable profit from their investment into stock market which climbed to a record 10-year high and their tickers were in the banking sector which had seen a fair price growth throughout the year.

From this March until now, the stock market, however, has witnessed unusual situation and there were trading sessions when most of the tickers saw a sharp price decline.

N. has felt headaches seeing his investment value going down considerably over the period. Early this year, he lost a big sum from his investment into crypto currencies when their value took a plunge in the international market.

In some recent years, the deposit interest rates were kept at a low and stable level at around 6.4-7.2 per cent per year to reduce inflation threats. Like the family of D.N., more and more people have opted to invest in diverse other channels, such as real estate, gold or new investment channel as crypto currencies in pursuit of higher profits.

These investment options, however, prove more risky and are hardly predictable, leaving retail investors highly prone to suffering losses.

That is because most retail investors neither have in-depth knowledge about the field nor spend sufficient time to carefully take care of their investments.

They also are not good at risk control. Meanwhile, if they chose to join hand with professional investment funds, retail investors could make avail of the funds’ professional investment teams who have experiences and knowledge about how to control risk effectively in the stock and real estate market, to help the investors curtail risk to a minimum level with their investments.

What baskets to become most suitable?

Alongside market growth, nowadays retail investors are being served with more and more investment tools. Diverse investment funds presented by securities firms or credit institutions prove a viable investment channel helping individual investors to offset their limitations with retail investments.

Unit-linked insurance products have become a favoured option to many retail investors

Some such channels, however, have their own shortcomings. Such as stock investment funds have only invested in stock. When the stock market goes up, investors can count profits, but when it goes down, there will be more risk.

To lessen risk, retail investors need to find several “baskets” to put in their “eggs”.

Today, through providing unit-linked insurance products investment funds are in a position to provide several “baskets” catered to different kinds of “eggs”, helping their customers to pull down risks.

In fact, unit-linked insurance product lines have posted upbeat growth in recent years. According to PRUlink’s unit-linked products’ annual report which was released late in the first quarter of 2018 by foreign-backed life insurer Prudential Vietnam Limited, as of December 31, 2017 the net asset value of PRUlink investment funds had seen an upbeat growth, such as the PRUlink Vietnam Equity Fund (equity asset accounting for 89.6 per cent) saw 56.6 per cent jump in the net asset value, the PRUlink Growth Fund (equity asset accounting for 65.4 per cent, bond asset 23.3 per cent and the remaining being cash) saw 42 per cent growth, higher than the market average growth level.

The accrued net profit ratio of PRUlink Vietnam Equity Fund during 2013-2017 had reached 202.4 per cent.

PRUlink funds are investment funds belonging to unit-linked insurance product lines of Prudential Vietnam Limited. The funds are managed by EastSpring Investments which were founded in 2005 and currently report $2.76 billion of assets under management in the Vietnamese market.

The advantages of these funds are that they do not require big investment amounts suited to retail investors’ needs and investors’ investment value would be flexible shifted among the funds.

Besides, retail investors might choose equity funds if they want higher level of profitability, but it is more risk. Otherwise, they can choose bond funds as it is less risky.

PRU-FlexInvest is Prudential Vietnam’s new unit-linked product, helping the customers to hold initiative before changes in their life, in the meantime having the opportunity to effectively grow their asset value. The new product offers attractive benefits such as the opportunity to invest in and grow assets with six PRUlink units.

Participating in PRU-FlexInvest, the customers have the opportunity to receive a bonus equal 3-5 per cent of their basic insurance premium if their annual basic insurance premium was from VND50 million ($2,200). In addition, the customers will have a chance to receive other bonus such as bonus for contract maintenance.