Dragon Capital CEO Candidly States: Vietnamese Investors Hold Funds for Over a Year, Often Comparing Returns to Bank Interest Rates

On the afternoon of December 12th, the Vietnam Financial Consulting Association (VFCA) and Vietnam Finance Magazine hosted the Vietnam Capital Market Outlook Forum 2026, themed “Breakthrough on a New Foundation.”

Speaking at the forum, Ms. Luong Thi My Hanh, Director of Asset Management, Domestic Block, Dragon Capital Vietnam, emphasized that Vietnam is entering a pivotal phase of a new development cycle. She highlighted a rare convergence of opportunities: a highly open economy, a golden demographic structure, abundant labor, and a shift in development mindset.

However, Ms. Hanh pointed out that the most significant challenge lies in the time constraint. By around 2039, Vietnam will begin to face population aging, while the goal is to become a high-income country by 2045. The window of opportunity is narrow; failing to capitalize on this period could result in a missed historical chance, she warned.

In this era of development, the demand for capital is immense, and it must lead the way. Yet, Vietnam’s capital market remains underdeveloped. The economy heavily relies on the banking system, with credit outstanding exceeding 134% of GDP by the end of 2024. Over the past 20 years, the number of investment funds in Vietnam has grown to approximately 100, but their scale remains modest.

“I often joke that Vietnam’s investment fund figures are represented by two ‘ones’. The first ‘one’ is that the total size of investment funds is less than 1% of GDP—around $30 billion. The second ‘one’ is that the number of investors in investment funds and fund certificates is only about 1 million. These numbers are quite humble compared to other regional markets like India and Thailand (over 20%). Meanwhile, Vietnam’s population and savings rate are not inferior,” she illustrated.

Vietnam aims to increase the capital scale of investment funds to 5% of GDP by 2030, a tenfold increase in just five years. This ambitious goal, according to Ms. Hanh, is a direction worth considering and pursuing.

Another barrier, she noted, is the distribution channel, as the current legal framework has many limitations. Commercial banks are not yet allowed to directly distribute fund certificates.

Additionally, a common limitation in many countries, including Vietnam, is the short-term investment mindset, favoring speculation over asset accumulation. Most investors hold fund investments for just over a year and often compare returns with bank interest rates.

“Globally, pension funds are the largest investment funds, playing a crucial role. However, in Vietnam, pension funds are still in their infancy, with limited scale. After eight years of legal existence, pension funds have a size of less than VND 2,000 billion and fewer than 30,000 investors. This means pension funds have yet to contribute significantly to social security. Without a strong transformation, it will be challenging to build a capital foundation to support the breakthrough goal in the next 10-20 years,” she analyzed.

To address these issues, Ms. Hanh suggested prioritizing the mobilization of domestic capital, which is abundant but short-term. The key is to shift this capital to long-term investments, with tax incentives playing a decisive role. Experiences from Thailand, India, and Taiwan show that tax benefits can significantly alter investment behavior. Therefore, considering income tax exemptions for long-term investments is essential.

Expanding distribution channels by removing legal barriers and allowing commercial banks a larger role in fund product distribution will make it easier for citizens to access investment funds, turning them into a mainstream asset class.

Another critical step is to refine the legal framework for pension funds in line with international standards, while broadening investment scopes to enhance competitiveness. This will strengthen the role of pension funds in ensuring social security, especially for informal workers.

Finally, Ms. Hanh proposed implementing a national financial education program to enhance financial literacy among the population.

“If people lack financial understanding, they will never make the right investment decisions. Surveys show that Vietnamese financial literacy, savings, and investment awareness are among the lowest globally. We can introduce financial education from primary to high school levels. Currently, most international schools offer such programs, but public schools do not,” she suggested.