The selection of stocks based on strict criteria and risk management for the investment portfolio becomes particularly important. Currently, assessing the valuation and growth potential of individual companies and stocks is much more important than looking at the overall market valuation. — VNA/VNS Photo

Multiple open-end funds have reported significant profits since the beginning of 2023, although last year many suffered losses or low profits due to market declines.

Good Profitability Rates

Many open-end funds have recorded higher rates of return compared to the market average. Among them, the VinaCapital-VESAF Fund recorded the highest rate with a 37% increase in profits, followed by SSISCA with a nearly 36 per cent increase, VCBF-MGF with 35 per cent, DCDS 34.8 per cent, DCBC 28.7 per cent, while the benchmark VN-Index only 20 per cent.

Nguyễn Hoài Phương, the Investment Director and Fund Manager of VinaCapital-VESAF, stated that in the early months of 2023, the portfolio of the fund underwent significant changes in the proportions of stock groups based on assessments of macroeconomic policies and growth prospects of the economy.

"We have increased our investment in stocks benefiting from infrastructure development (from 11.7 per cent of the net asset value of the fund at the end of 2022 to 13.6 per cent at the end of August 2023), financial stocks (from 13.2 per cent at the end of 2022 to 17.2 per cent at the end of August 2023), and recently, export-oriented stocks with attractive valuations, with the hope that Việt Nam's export situation to improve significantly in the early months of 2024," said Phương.

Stock selection of Vietcombank Fund Management Company (VCBF) is based on in-depth analysis and valuation of each company. With careful selection of companies, the fund's portfolio tends to decrease less when the market declines and increase more when the market rises, said Nguyễn Thị Hằng Nga, Deputy General Director of VCBF.

The fund pursues long-term investments and holdings. The company does not engage in continuous buying and selling of stocks because it believes that consistently predicting short-term market trends is impossible, while the fund has the ability to predict the long-term growth of companies. With this strategy, the oldest equity fund managed by VCBF, VCBF-BCF (established in August 2014), has held stocks that have increased in value by 5 to 7 times, such as FPT Corporation (FPT), Asia Commercial Bank (ACB), Phú Nhuận Jewelry (PNJ) and Military Bank (MBB).

VCBF maintains a diversified portfolio, which helps minimise risks during market declines and benefits from market recoveries, she said.

According to Nga, the VCBF-MGF Fund was established when market valuations were very high, but since its inception, the fund recorded an increase of more than 3 times, while the VN30 index increased by 1.9 times.

"We patiently waited for our preferred stocks to adjust to the target buying price and held them through the difficult period of Q4, 2022. In 2023, when the market recovered, the fund achieved a 35 per cent profit in the first eight months of the year," said Nga.

DC Corporate Investment Fund (DCBC), the second public fund managed by DCVFM, allocates about 20 per cent of its investment capital to bonds and cash and 80 per cent to equities, mainly stocks of large-cap companies with good growth potential. The allocation ratio between these two types of securities can fluctuate +/- 10 per cent, depending on market conditions.

Open-end funds with outstanding results compared to the general market are gradually attracting more investors. However, the prices of fund certificates fluctuate according to the laws of supply and demand and market prospects. Therefore, investors are advised to be patient when investing in fund certificates, especially to maintain investments during market downturns, Nga said.

In uncertain situations, investors should allocate their investments into multiple instalments, and when the market declines, they need to maintain discipline and continue to implement their investment plans.

Risk management a priority

Risk management has been a priority for open-end funds in recent years, contributing significantly to their effectiveness amidst unpredictable macroeconomic conditions in both domestic and global markets, said Nguyễn Hoài Phương, the Investment Director and Fund Manager of VinaCapital-VESAF.

The selection of stocks based on strict criteria and risk management for the investment portfolio becomes particularly important. Currently, assessing the valuation and growth potential of individual companies and stocks is much more important than looking at the overall market valuation, she said.

"These perspectives help us identify stocks with reasonable valuations and long-term growth potential. Additionally, the capability and reliability of corporate leadership are essential factors in our investment decisions," she said.

Open-end funds are demonstrating flexibility in investment decisions. Currently, as the market has experienced an impressive upward trend for nearly five months since the end of April 2023, causing stocks in general to no longer be cheap, the correct selection of stocks, portfolio restructuring, and appropriate adjustments to the proportions of industry sectors will determine the effectiveness of the fund's investments. — VNS