Open-ended funds (''OEFs'')

Open-ended funds
An open-ended fund is a mutual fund which means it is a pool of assets contributed by many investors pursuing the same, common investment objective.
Open-ended fund is managed by professional fund management companies and regulated by special laws to ensure that normal investors can benefit from pooling their savings with other investors.
An open-ended fund is an open fund meaning it there is no fixed investment duration or fixed number of investors.
An open-ended fund allows the purchase and sale of units in its pool of assets at the Net Asset Value (“NAV”) on any trading day; this ensures that all investors, existing and new, are treated equally and fairly.

 

Video What is Open-ended funds?

The following graph describes the investment process

 

The pool of funds contributed by all investors in an open-ended fund is invested by experienced investment professionals managing the fund in securities of companies, often bonds and shares. Thus, investment in open-ended funds is a form of indirect investing in securities. Instead of receiving shares or bonds of a company directly as if the investor had invested directly in a company, an investor in an open-ended funds receives units in the fund. These units are the investor’s holdings of the fund’s pool of assets. If the open-ended funds perform well, the assets under management of funds will increase in value which means the unit’s value increases too for all the investors.

Therefore, open-ended funds may bring high returns to the investors in the long term.

 

Suitable for whom?
Investors do not have specialized financial knowledge
Investors are busy and have no time to analyze the markets every day
Investors want to invest in long term
Investors prefer the discipline and convenience
Investors want to diversify in investment

 

Types of Open-ended funds
Bond and equity are two popular types of open-ended fund.
There are many different kinds of open-ended funds and vary according to the securities and markets they invest in.

 

The following graph describes the fact that each class and sector have own risks and reward.

 

Open-ended funds worldwide

Open-ended funds are quite new to Vietnam, but have been in existence in other markets for many years. In America, around half of households are investing in open-ended funds.

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