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Hwang-DBS is positive than its latest fund will give investors an absolute return of at least 8% and over time, will look to invest in other Indochina markets such as Cambodia, Laos and Myanmar as they develop. Laos has been touted by the firm as the most likely market the fund would invest in next, but no date has been formally set.
For the time being, the firm expects that its return goal can be achieved through an investment ratio of 30/70 of Vietnamese bonds and equity. On the equity side, Hwang-DBS will likely devote a significant amount of assets into consumer-related stocks like telecoms and financial services.
According to Hwang-DBS, VietnamÆs consumption rate will likely grow by 15% in 2007, which when added to the fact its GDP is expected to grow by 7.8% this year, suggested that the time was right for Malaysian investors to send funds into the country.
The fund has an approved size of RM100 million (just under $30 million), equivalent to 200 million units and comes as more Malaysian funds will be heading offshore. The launch comes less than months after MalaysiaÆs central bank, Bank Negara Malaysia, allowed more offshore funds to be developed and offered to retail investors. Under the new regulation, certain local funds can now invest up to 50% of their portfolios offshore, which follows regulatory changes in 2005 that permitted local funds to invest 30% outside Malaysia.
In terms of distribution, Standard Chartered have been given the first opportunity to sell the fund in all of its branches in Malaysia. It is believed that other banks will be given the chance to sell the Hwang-DBS Indochina Fund in the coming weeks.
The new fund will feed directly a collective investment scheme known as the DBS Indochina Fund. This fund is managed from Singapore by DBS Asset Management.
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