Despite the strong gains in VietnamÆs stock market in recent years, its fund management industry remains at its very early stage and the Technological and Commercial Bank (Techcombank) doesnÆt need to rush in just yet, according to its chief executive officer, Duc Vinh Nguyen.

ôWe are quite delayed in the fund management area, and that is quite intentional,ö Nguyen says. ôMost of the activity for now is coming from abroad.ö

Indeed, international fund managers are looking at Vietnam more seriously now and are considering investing in this emerging market. Offshore funds that invest in Vietnam, even those managed from local offices in either Hanoi or Ho Chi Minh City, get their fund raising from overseas.

Local Vietnamese are not yet keen to invest in funds. Many prefer to either invest in the stock market directly or invest in property. Manulife Vietnam Fund Management Company for example generated around VND215 billion ($13.6 million) for its Manulife Progressive Fund when it closed the fund in September, which was only 85% of its target fund size. Given that this was only the third public fund available in Vietnam, expectations in terms of retail subscription were higher.

Nguyen does not expect to see an increase in the volume of subscriptions for similar public funds that will be launched in the near future.

There are around 40 fund management companies with licenses in Vietnam and most offer so-called member funds, Nguyen says, which is not widely available to the retail market. Fund managers approach potential investors, usually existing clients, one-on-one to participate in the member funds.

ôFew (fund management companies) are really in the position to build the industry at the moment,ö says Nguyen. ôWe believe it will not yet be too late for us to enter the fund management area.ö

When Techombank does go into the fund management business, it will likely be through offering wealth management services, Nguyen says.

ôThere is a better chance for the bank to participate in wealth management,ö he says.

Nguyen notes that only around 3-4% of its existing customers are investors.

ôIt will require a lot of innovation in terms of products,ö he says, adding the bank is already conducting research on the types of products that would likely generate demand.

He notes, however, that even as the bank is already looking into the feasibility of providing wealth management services in the future, there is still ôsome regulatory questions whether the bank can do it.ö

Founded in 1993, Techcombank is one of the country's largest joint stock banks, with assets at around VND25 trillion ($1.6 billion). Techombank has around 200,000 personal and around 13,000 commercial customers through a network of over 100 branches and transaction offices.

Nguyen made the comments at the recent Funds World Vietnam 2007 conference in Ho Chi Minh City, which had 160 fund managers, investors, and investment professionals in attendance.