Learn about HVA What is a bond fund?, bond investment funds in Vietnam and learn how to choose best bond fund to maximize profits right away.
What is a bond fund? Common types of bonds
Good bond fund bond fund is a type of collective investment fund, managed by professional fund management companies. Instead of buying and managing bonds themselves, investors will contribute capital to the fund and own a portion of that fund's bond portfolio.
Bond fund portfolios are primarily comprised of different types of bonds to diversify risk and maximize returns. Here are the most common types of bonds:
- Government Bonds: Issued by the Government, usually have a high level of safety.
- Corporate bonds: Issued by companies, offer higher yields but also come with higher risks.
- Municipal bonds: are bonds issued by local governments.
- International bonds: Issued by international organizations or governments of other countries.
What is a bond fund certificate and its benefits?
>>> See more articles: Risks of Investing in Bonds: What Investors Need to Know
A bond fund certificate is a document certifying an investor's ownership in a bond fund. Each certificate represents a portion of the investor's capital contribution to the fund.
Benefits of bond fund certificates:
- High liquidity: Like stocks, you can easily buy and sell bond fund certificates on the market. This means you can quickly turn your assets into cash when you need them.
- Diversify your risk: Instead of investing all your money in a single bond, when you buy a mutual fund, you are investing in a diversified portfolio of bonds. This helps reduce your risk if one bond goes wrong.
- Access to a wide range of bonds: With a single fund, you can own a small portion of hundreds, or even thousands, of different bonds. This allows you to diversify your portfolio without having to spend a large amount of money buying each individual bond.
Bond investment funds in Vietnam
Vietnam bond funds is growing, opening up many attractive investment opportunities for investors. Reputable bond fund management companies in Vietnam such as:
VCBF: Vietcombank Fund Management
- VCBF is one of the leading fund management companies in Vietnam, backed by the prestige of Vietcombank.
- With many years of experience and a team of experienced experts, VCBF provides a variety of investment fund products, including bond funds with different levels of risk, suitable for the needs of many customer groups.
SSI AM: SSI Asset Management
- SSI AM is a fund management company under SSI Securities Company, one of the leading securities companies in Vietnam.
- SSI AM provides diversified investment solutions, including bond funds with the aim of bringing stable and sustainable returns to investors.
Techcombank Fund Management
- Techcombank Fund Management is a fund management company under Techcombank.
- With the support of its parent bank, Techcombank Fund Management provides diversified investment fund products, including bond funds with a wide range of options in terms of maturity and risk levels.
Bao Viet Fund Management
- Bao Viet Fund Management is a fund management company of Bao Viet Group, one of the leading financial groups in Vietnam.
- With the experience and reputation of Bao Viet Group, Bao Viet Fund Management provides diverse investment fund products, including bond funds with the goal of bringing stable and long-term profits to investors.
Criteria for evaluating a good bond fund
The evaluation of a best bond fund also depends on the following criteria:
Past performance
- Comparison with benchmark index: A good fund often outperforms benchmark indexes such as VN-Bond.
- Stability in different market phases: A good fund will show the ability to maintain stable returns in both up and down markets.
INVESTMENT PORTFOLIO
- The portfolio should include a variety of bonds (Government, corporate, municipal…), multiple maturities and multiple sectors.
- Credit quality: Bonds in the portfolio should have high credit ratings.
- Management Fee: The lower the management fee, the higher the investor's return.
- Fund size: Large funds typically have better liquidity.
- Management company's history: Reputable fund management company, experienced and professional team.
- Investment Objective: The fund's objectives must be consistent with the investor's objectives.
- Risk: The level of risk must be appropriate to the investor's risk tolerance.
In addition, when investing in bond funds, investors also need to note the following:
- Investment goals: Clearly define your investment goals to choose the right fund.
- Investment period: Bond funds are usually suitable for investors with medium and long-term investment periods.
- Risk tolerance: Each bond fund has different levels of risk, investors need to consider carefully before deciding.
- Management Fees: Fund management fees will affect investor returns.
- Before deciding to invest, you should consult with people experienced in the field. financial investment to minimize investment risk.
Some risks in investing in bond funds
Interest rate risk
- Reason: When the central bank raises the base interest rate, investors tend to shift from bonds to investment channels with higher interest rates. This leads to a decrease in demand for bonds, causing bond prices to fall.
- Impact: Investors holding bonds may suffer capital losses when selling.
- Solution:
- Choose short-term bonds: Short-term bonds are less affected by interest rate fluctuations.
- Maturity diversification: Spreading your investments across bonds of different maturities helps reduce risk.
Credit Risk
- Reason: The enterprise issuing the bond is facing financial difficulties and is unable to pay interest and principal on time.
- Impact: Investors may lose all or part of their investment capital.
- Solution:
- Choose bonds with high credit ratings: Bonds with high credit ratings such as AAA, AA usually have lower credit risk.
- Diversify your portfolio: Invest in bonds from different companies in different industries.
Liquidity risk
- Reason: It is difficult to sell bond fund certificates to recover capital quickly, especially for small-scale funds or those investing in less popular types of bonds.
- Impact: Investors may be forced to sell at a price below market price.
- Solution:
- Choose a large-sized fund: Large-sized funds usually have better liquidity.
- Monitor liquidity ratio: Check the fund's liquidity ratio before investing.
Foundation HVA has summarized for you the necessary information to better understand the certificate. What is a bond fund? and factors to consider when choosing a bond fund. Bond funds are an effective investment tool that helps you diversify your portfolio, minimize risks and achieve your financial goals. However, the financial market is always volatile, so consult an expert, and carefully monitor and research Vietnamese bond funds to make the best investment decision.
