Investment funds in Vietnam outperform benchmark VN-Index

Many open-ended investment funds in Vietnam delivered impressive performance in 2024, achieving returns of up to tens of percent with portfolios focusing on leading stocks in banking, technology, and retail sectors.

On December 31, the VN-Index, which represents the Ho Chi Minh Stock Exchange (HoSE), closed at 1,266.78 points, a 12.1% increase from the beginning of the year. The index had increased for two consecutive years. It rose by 12.2% in 2023.

However, the upward momentum was largely concentrated in the first three months of the year, with the index subsequently fluctuating within the 1,200-1,300 point range. There was no specific sector strong enough to drive the market forward, with significant divergence among different stock groups and even within the same sector.

In the first four trading sessions of 2025, the VN-Index decreased in two out of the four sessions, with substantial corrections last Friday (January 3) and Monday (January 6), when it dropped by 15.12 points and 8.24 points, respectively. On Tuesday (January 7), the VN-Index stood at 1,246.95 points, reflecting a 7.48% increase year-on-year.

The unpredictable fluctuations of the VN-Index have made it more challenging to select stocks for investment. Many investors have shared on various forums that their portfolios are still in the red, even though the market is on the rise. In this context, many open-ended investment funds have achieved returns of several tens of percent.

Open-ended investment funds are a form of indirect stock market investment, where multiple investors pool their money and entrust it to a fund management company. Experienced investment experts at these funds select stocks (or bonds) based on fundamental analysis of companies and the market value of stocks/bonds, helping investors achieve returns over the medium and long term.

Over the past year, the SSI Sustainable Competitive Advantage Fund (SSI SCA) led the way, with a return of 27.55%. SSI SCA is managed by SSI Asset Management Co., Ltd. (SSIAM), a subsidiary of Vietnam’s top broker SSI Securities. The fund's investment goals are long-term asset growth and stable income generation for investors by investing in companies with sustainable competitive advantages and fixed-income assets.

Another fund from SSIAM, the Vietnam Long-term Growth Fund (VLGF), also achieved a strong performance with a 12-month return of 23.93%.

VinaCapital, a foreign fund, had four members with high returns. Among them, the VinaCapital Modern Economy Equity Fund (VMEEF) recorded a return of 27.45%, primarily investing in stocks with strong long-term revenue and profit growth prospects. Other funds under VinaCapital include the VinaCapital Equity Opportunity Fund (+18.69%), the VinaCapital Equity Special Access Fund (+17.51%), and the VinaCapital Insights Balanced Fund (+14.63%).

The open-ended funds of Vietcombank Fund also posted strong returns, with VCBF-BCF (+23.15%) and VCBF-MGF (+22.59%), while DCDS from Dragon Capital achieved a return of 19.78%.

Investment preferences of top-performing funds

Investment funds tend to prioritize stocks of leading companies in sectors like banking, technology, and retail. One such stock, FPT of tech giant FPT Corporation, has appeared in the portfolios of many top-performing funds.

Over the past year, FPT rose 77.4% to VND150,100 ($5.91) per share. This significant growth is attributed to FPT Corp.’s collaboration with the world’s leading chip producer, Nvidia, and a pre-tax profit of VND9,226 billion ($363.5 million) in the first 10 months of 2024, up 20% year-on-year, achieving 85% of the year's profit target.

Another popular stock among top funds is FOX of FPT Telecom, a member of FPT Corp. On Tuesday, FOX hit VND99,200 ($3.91) per share, an 81.68% rise over the past year. The strong growth of FOX is driven by high expectations of the technology sector, especially with the landing of global tech giants in Vietnam and the signing of agreements related to AI and semiconductor fields.

Other stocks in the portfolios of top funds include MWG of Mobile World Investment Corp. (+32.18%), BWE of Binh Duong Water - Environment Corporation (+28.67%), CTG of Vietinbank (+26.73%), STB of Sacombank (+26.37%), MBB of MBBank (+20.28%), and ACB of Asia Commercial Bank (+13.41%).

The superior performance of these funds compared to the VN-Index can be attributed to several factors. First, these funds are managed by experienced and highly skilled experts. Thus, stock investment decisions are based on thorough analyses of financial reports, stock valuation, and technical analysis, offering a more comprehensive understanding of the market.

Second, funds diversify their portfolios across multiple assets, ensuring that no single stock exceeds 20% of the net asset value (NAV). This diversification helps reduce risk.

Although the concept of open-ended funds is relatively new to Vietnamese investors, it has been prevalent in developed markets like the U.S., Malaysia, Singapore, South Korea, Thailand, China, and Japan since 1924. At the end of 2023, only 0.26% of the Vietnamese population invested in fund certificates, as compared to over 52.3% of U.S. households.

In the future, open-ended funds are expected to have strong potential thanks to the low deposit interest rates and growing demand for effective investment channels, making them an attractive alternative for optimizing returns on idle money.

Moreover, the government’s Decision 1726 approving the Strategy for Developing the Securities Market by 2030 outlines many solutions to enhance the development of the investment fund market. They include improving the legal framework, raising the standards of fund management companies, and researching support mechanisms for securities investment funds, ensuring legal system coherence.

Decision 1726 also emphasizes the importance of developing and diversifying investment fund types to improve the quality of investment demand. It plans to create legal frameworks for mutual funds investing in the money market, exchange-traded funds (ETFs), and fund-of-funds, as well as encourage the development of pension funds to promote voluntary pension programs in Vietnam.