“Opportunities, Readiness, and Potential of Collective Investment Schemes”
Fireside Chat with SERC
Aegies is honored to be invited by the Securities and Exchange Regulatory Commission of Cambodia (SERC) as a speaker for the 26th Securities and Fund Practitioner Training Course on December 7, 2023. Dr. Vin Pheakdey, H.E., Deputy Director of Fund License Issuance and Administration of SERC, and Dr. Sarah Hsu, CEO of Aegies, shared their views on " Opportunities, Readiness, and Potential of Collective Investment Schemes" with practitioners, exploring the investment advantages of pooled investment schemes and how to utilize Fintech to achieve financial inclusion and enhance the efficiency of financial services, as well as the investment benefits and market opportunities created by the Aegies Money Market Fund!
Highlights of the discussion are summarized below:
Q1：Please elaborate on the fundamental concept of CIS to our participants, and also the advantages of CIS to Cambodia?
Sarah：Collective Investment Scheme (CIS), often referred to as a mutual fund, is a form of investment that pools together the capital of a large number of investors and invests it in a wide range of assets by a professional investment team, where all investors share the dividends and risk of the investment.
CIS has many advantages over other forms of investment, four of which are summarized below:
1. Diversification: By diversifying investments into different assets or targets, the overall investment risk is reduced.
2. Convenience: Investing is made simple by having a fund management company to manage your investments on your behalf, and you will receive regular reports on how your money is being invested.
3. Cost: Pooled funds are cost-effective and fixed costs will be allocated to all beneficiaries of the fund.
4. Professional investment management: Keeping abreast of the latest market information and research results, and constantly monitoring the market for potential investment opportunities.
H.E. Pheakdey：Through Dr. Hsu's answer, we understand that CIS is very beneficial to individuals with limited investment knowledge and time, as investors can save costs and diversify their investments by simply investing their money in the fund and leaving it to professional investing management team.
Q2：Related to the market, the investment landscape is dynamic and influenced by various factors. Could you explain to our participants how market fluctuations work in Collective Investment Schemes and how they adapt/change with investment projects?
Sarah： Like any other investment instruments, the net asset value of Collective Investment Scheme (CIS) fund can be affected by market fluctuations. As an investor, it can be time-consuming and cumbersome to track a lot of domestic and international information and try to figure out how these factors might affect your investment assets, but CIS has the advantage of having professional fund management team to help you understand market conditions and a 'diversification' mechanism that allows the fund's investment portfolio to be adjusted dynamically without having to take on the risk of a single asset. Of course, our professional team will closely monitor global and domestic financial conditions and make timely adjustments to the portfolio.
H.E. Pheakdey： CIS uses Net Asset Value (NAV) to base its calculations on the assets invested in the Fund's programs, which fluctuate based on economic conditions or news.
Q3：Related to the CIS market, could you share with us the steps your company has taken to be ready for operations, ensure regulatory compliance, and investor protection?
Aegies Fund Management Limited was incorporated at the end of 2019 and was granted a fund management license in August 2021 by SERC. We are very compliant with SERC's fund regulatory requirements, including pre-registration of MOC, fund preparation, application for fund license, setting up a dedicated CIS fund system, completing various documents (including trust deed, disclosure documents, and investment policy) required for fund issuance, etc. We are also working closely with SERC to ensure that our fund management system is fully compliant with SERC's regulatory requirements.
In order to better protect and inform our clients, and to enhance investment transparency, the official website of Aegis will disclose the fund's investment policy, investment performance, and market outlook, so that investors can have a clear understanding of each fund product before investing, as well as provide product recommendations based on the investor's risk tolerance level through KYC (Know Your Customer) evaluation. We have built a comprehensive and robust fund system that minimizes the risk of human error (operational risk) and technical issues by strictly managing every step of the investment process, from NAV calculation to investment process control.
We highly value the funds entrusted to us by our investors. Therefore, each fund will have a dedicated account for that fund in the name of the trustee company, which will handle fund investments, subscriptions and redemptions by our instructions, and CSA Bank will triple-check each transaction in order to protect the interests of our investors. Finally, I would like to mention that Aegies is also audited and assisted by the Big 4 accounting firms and professional legal firms. Through their independent and professional supervision, investors can trust our investments.
Q4：We know one of the benefit objectives of CIS in investment diversification, so could you share the best practices your company employs to effectively diversify investment portfolios, minimizing risks and optimizing returns/profits for investors?
Sarah： The first fund we are about to launch is a money market fund with an investment target of mainly short-term assets, specifically bank deposits/time deposits in Cambodia. Because banks in Cambodia do not have a rating system in place yet, in order not to put all the eggs in one basket (of banks), we have set up a bank rating system internally to screen the banks that we are going to invest in, and that's how we diversify our investment objectives.
H.E. Pheakdey： Even if the bank ratings in Cambodia are not yet ready, the fund can invest if the company develops its own internal rating system.
Q5：FinTech, using technology for providing financial products and services, has been an undeniable competitive advantage in the financial industry. How do you envision leveraging technology to provide the public with accessibility to CIS investment, and streamline your business operations with Trustee, Fund Administrator, and Fund Distributor?
Sarah：We see FinTech as the key to achieving financial inclusion and operational efficiency. In the past, investors needed higher investment amounts to access financial services. Now, thanks to the proliferation of cell phones, the Internet and messaging technology, even small investors can enjoy the services provided by fund management company professionals. For example, you may have heard of China's Alibaba's Balance Bao, which utilizes financial technology to combine payment services with fund investment, allowing users to invest in funds with only a small amount of money through the power of CIS, which is also a way to achieve financial inclusion.
As for streamlining the business operations of trustee companies, fund management companies and fund distributors, we have created a dedicated system that digitally connects various fund partners and allows them to connect to our platform remotely, including uploading, downloading and viewing fund-related data.
H.E. Pheakdey：FinTech plays a very important role in the CIS market and now we are using it in the stock market as well, for example, connecting to the banking system and using the CSA app to transfer funds and invest in the stock market as easily as transferring from a main account to a CMA account, and hopefully we will be able to do that in the CIS market as well!
Q6：In CIS market, we think about affordability public can access to their investment. So, the success of CIS relies on attracting a broad range of participants and capital. Could you share with us your targeted clients and the affordability and accessibility aspects of your products? Do you consider attracting foreign investment into Cambodia’s CIS market?
Sarah： Aegies' first CIS fund offering will be a Money Market Fund, which is relatively low risk and has a very stable return. We are targeting a very diverse clientele, and I think the Aegies Money Market Fund will be aimed at legal entities with relatively large investments, whose idle money is suitable for a Money Market Fund. On the other hand, with a minimum investment threshold of US$100, it is also very suitable for individual investors. We also plan to attract large foreign investors to invest in money market funds, thereby bringing foreign capital into the Cambodian CIS market.
