Open-ended funds - an investment vehicle from international markets

This is a good time to invest in stocks, but not everyone can invest successfully by themselves.

To invest in stocks, many investors do not have enough time to monitor either what is happening in the securities markets or the performance of listed companies on daily basis. Even investors who want to invest in equities will sometimes find it difficult to recognize the sectors or companies with potential to invest. They may lack sufficient knowledge about finance and securities and be unable to analyze companies’ financial situation.

For bonds, individual investors will even find it more difficult to invest because these securities require a large amount of capital – up to VND 10 billion – per transaction.

Under the circumstances, is it possible for individual investors who do not have enough time or in-depth knowledge to participate in the stock market at all? The answer is yes – investing in an open-ended fund.

In the developed markets such as America, Europe or Japan, it is very popular for individuals to invest their savings in open-ended funds, similar to the way people in Vietnam make their savings in bank deposits. For these individuals, investing in an open-ended fund is simply a way of saving for the long-term in a way which can generate higher returns than bank deposits in the long run. Open-ended funds are also flexible, and savings can be withdrawn if the performance or outlook of a fund is unsatisfactory and re-invested elsewhere. Similarly, in case of an emergency requiring you to use funds from your long-term savings plan, a withdrawal of some or all of the money invested is possible.

Open-ended funds were first introduced in Vietnam when the first bond funds were launched in early 2013. VCBF Tactical Balanced Fund (VCBF-TBF) was introduced in late 2013 and was the first fund investing in both stocks and bonds. It offers a broad diversification and a tactically balanced exposure to the asset classes. In contrast, VCBF Blue Chip Fund (VCBF-BCF) invests only in stocks of large companies with high market liquidity.

To be effective, open-ended funds must be managed by a team of investment professionals who are highly qualified, have adequate information about the market and each investment, and can continually monitor the investments. At VCBF, the investment team has over 85 years of combined experience in the field.

Each type of open ended fund has a different investment strategy which is applied according on the fund and market conditions. Investors can select a suitable fund or combination of funds which is suited to their individual requirements.


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