Open-end funds are also considered a potential investment that many people choose. So What is an open-end fund?? Also in Vietnam, what open-end funds are there? Find out now.
What is an open-end fund?
First let's find out together What is an open-end fund??
It can be said that open-end funds are a form of collective or organizational investment, where investors pool their capital together to form a common fund. And this common amount will be used by a professional fund management company to invest in many different types of assets such as bonds, stocks or real estate with the common purpose of increasing profitability. Here, investors will be able to buy or sell open-end funds at any time they want and according to the net asset value or NAV of the financial fund at that time.
We can also understand in a simpler way that is the open-end fund will be contributed or gathered capital from many different investors and they will have the common goal of making a profit. And these investors will not interfere in the investment decisions of the fund but there will be financial experts with a lot of experience, solid investment knowledge over many years will be the ones to stand up and screen as well as give a choice so that it is truly suitable and will bring the most profit, the best profitability for investors. And the person who stands up to represent investors to manage this capital fund will be the reputable fund management companies in the market.
Open-end funds do not have any regulations on the number of investors, so anyone can participate in investing in open-end funds as long as they meet all the conditions set by the fund. In addition, there are no regulations on time or duration. Investors can sell or buy fund certificates at any time they want and are not bound by any fixed period.
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Benefits of investing in open-end funds
Out of question What is an open-end fund? Many people also want to learn about the benefits that open-end funds bring when choosing to invest. So let's find out with HVA right away.
Firstly, the most obvious advantage is that investors can freely buy or sell fund certificates at any time without worrying about time constraints. In addition, when contributing capital, investors do not need to have a large initial capital, and the minimum amount to invest in a regular open-end fund is only about 1 million USD. Compared to other types of investment, that number is not too high.
Next is that portfolio extremely diverse and rich, and most importantly, it will be strictly controlled by a team of leading experienced experts. In addition, the profit received can be said to be more than saving in Vietnam, the profit is quite stable and regular because it will come from many different profits from different investment portfolios.
During the investment process, it will always limit the risks to the maximum, without having to take too much risk. And the capital of investors will always be managed closely and strictly according to the provisions of law.
Another advantage that cannot be ignored is that with the help of fund companies, the implementation process becomes easier and investors do not need to have too much experience or need too much specialized knowledge in this field. They do not need to analyze too much or learn about the financial market in a complicated and in-depth way because everything is taken care of by experts.
Risks of investing in open-end funds
So besides the benefits that open-end funds bring, Risks of Open-End Funds What is that?
- The first is interest rate risk.: Because market interest rates have an impact as well as a more or less influence on the values of bonds in the opposite direction, meaning that if interest rates increase, bond prices will decrease and vice versa, so this is a risk that needs to be considered. It can be said that interest rate risk may occur in the case that investors decide to sell bonds at maturity in the secondary market and at this time the price in the bond market will fluctuate compared to the face value of the original bond, or in other words, the price at which the issuing organization sells bonds to investors in the first round will be offered to the public for the first time.
- The second is credit risk.: It can be said that this is the possibility that bond issuers will be at risk of debt or will not be able to complete all periodic coupon interest payments as well as the face value of the bond at maturity for investors.
In addition, there are also some risks that can affect the profit-making process from open-end funds, including how to invest in open-end funds, such as management risks, income risks, inflation risks, and market fluctuations.
How to invest in open-end funds safely and effectively
There are how to invest in open-end funds How to invest in open-end funds effectively and how to invest in open-end funds most effectively. To do so, it is necessary to ensure that the first step is to thoroughly research all relevant information as well as whether the sources of open-end funds are truly reputable and of good quality or not.
It is necessary to have a certain knowledge base because even though the management and investment are mainly regulated and implemented by the fund company team, you yourself also need to know the risks and evaluate whether the opportunities of this type are guaranteed or not, the ability to make a profit is high or low and whether it is really suitable for the economic situation as well as suitable for your investment taste or not.
The second is whether the service fee or management fee of the fund management unit that investors choose is really reasonable or not, is it low or equal to the general level. In addition, funds must be transparently publicized about the projects invested from the past until now and how effective the fund's operations are, high or low, how much efficiency is achieved or not, along with related information, it is also necessary to be publicized in as much detail as possible.
Besides, it is also necessary to pay attention to whether the investment portfolio of the open-end fund is really suitable for the market trend or not and the products as well as the investment areas of the fund must be really diverse and meet the selection needs of many investors. In addition, improving investment knowledge is also extremely important, helping to minimize risks and increase profits.
Best open-end funds in Vietnam
So there is Open-end funds in Vietnam Which is considered reputable? And which is the best open-end fund in Vietnam? Let's find out now.
It can be said that in Vietnam, there are some open-end funds that are considered to have good competitive advantages, and certainly must be mentioned, namely the funds of SSI company such as SSI-CA, SSI-AM, or SSi-BF. Or we can also mention some open-end funds invested at Vietcombank such as VCBF-TBF, VCBF-BCF, or VCBF. Besides, there are also some reputable fund management companies present in the market such as VinaCapital, Dragon Capital, Bao Viet, VNDirect or TCC Techcombank.
Funds that are growing well in 2024 despite the stock market being in a very difficult period: VWFF (Vinacapital), VNDBF (VNDirect), VFMVFB (VFM - technical support by Dragon Capital), VTBF (VietinBank fund), CBPF (Chubb Life), SSIBF (SSI), VFMVFC (Dragon Capital), MBGF (MBBank open-end fund), BVBF (Bao Viet).
But to find out which open-end fund is considered the best in Vietnam is certainly a difficult choice because it also depends on each person's opinion.
Hopefully with what HVA providing information about open-end funds, hoping that investors can understand what open-end funds are and know how to invest in open-end funds more intelligently and effectively. HVA hopes that you can achieve much success with your upcoming investment choices.
