What is an Open-ended Fund
WHAT IS AN OPEN-ENDED FUND?
An open-ended fund is a fund in which capital is contributed by investors with the same investment objective and is managed by a reputable fund management company. Experienced investors from an asset management company will invest money into securities (stocks or bonds) that are screened and selected based predetermined criteria with the ultimate aim to gain profit for investors in medium to long term.

The fund’s operation term is indenifite.
Investors can subscribe and redeem open-ended fund certificates without limitation. After the Initial Public Offering (IPO), investors can sell or buy fund certificate periodically based on the Net Asset Value per Fund Certificate (NAV/Unit) directly with the fund management company.
This type of fund allows investment diversification in order to minimize financial risk.
WHO SHOULD INVEST IN OPEN-ENDED FUND?
Open-ended funds are suitable for investors who:
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Want diversification in a portfolio with a small budget and low costs.
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Look for disciplined and convenient investment product that is managed by experienced specialists.
CLOSE-ENDED VS OPEN-ENDED FUND
Criteria
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Open-ended Fund
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Closed-ended Fund
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Liquidity
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High liquidity
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Lower liquidity
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Cash holding
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The fund has cash reserves to afford redemption of fund certificate.
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Cash holding is quite low as in theory, the fund can fully invest in securities.
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Trading price
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Based on NAV/Unit.
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Based on buying and selling demands of the market.
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Trading method
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Fund certificate is traded directly with fund management company (with or without subscription and redemption fees).
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Closed-ended fund certificate is listed on the stock exchange. It is traded as a listed security on the trading floor via a brokerage company.
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Change in fund size
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The fund size can change significantly through subscription/redemption of fund certificate.
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The fund size remains the same until maturity date (unless charter capital is increased).
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Operation term
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Indefinite
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OUSTANDING ADVANTAGES OF OPEN-ENDED FUND
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Low cost: With a small capital, investors can indirectly invest in many different investment instruments from stock, bond to real estate. Whereas, it is hard to invest directly this way if you don’t have a lot of money.
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Professionalism: When choosing open-ended funds, investors will have access to a professional fund management company that have experienced specialists and other resources to analyse and follow up on investment portfolios. Investors therefore can save time as there is no need to keep regular track of market movement.
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Flexibility: Open-ended funds are managed by a team of specialists with in-depth knowledge. They can quickly rebalance investment portfolios to adapt to complicated fluctuations of the market. This makes open-ended funds suitable for investors who do not have much time to follow up and respond to market movement and foreign investors who do not have sufficient understanding of the Vietnamese stock market.
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Investment diversification: Investment in stocks of different industries helps minimize risk. An open-ended fund invests is a basket of various securities, and can therefore be a tool to help investors with small budget still implement an efficient diversification strategy. Additionally, funds are allocated flexibly to stocks and fixed-income assets to generate profit growth and a stable income to owners of fund certificates.
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Earnings development: Throughout the fund’s life, ultimate goal is to protect investors’ benefits and increase assets. Investors can enjoy capital growth with the stable development of top competitive advantage firms in the market.
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Risk control: A strict risk control process is set up before, during and after the investment process, which helps the fund minimize risks.
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High liquidity: If needed, investors can liquidate their investment into cash easily by redeeming part of or the whole of their fund certificates.
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Time saving: Investors can free themselves of a large volume of work as there’s no need to analyse and look around for investment opportunities in an increasingly complicated financial market. As a result, they can spend more time with their own business and family.
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Transparency: All information related to the fund activities are updated regularly for investors, under the full and clear control of the supervisory bank.
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