Biến động quỹ đầu tư trong cuộc khủng hoảng Covid-19 ở Việt Nam

Biến động quỹ đầu tư trong cuộc khủng hoảng
Covid-19 ở Việt Nam
Trần Thị Xuân Anh - Nguyễn Quỳnh Thơ - Ngơ Thị Hằng
Khoa Tài chính, Học viện Ngân hàng
Ngày nhận: 31/03/2021
Ngày nhận bản sửa: 06/05/2021
Ngày duyệt đăng: 19/05/2021

Tóm tắt: Các quỹ đầu tư đóng vai trị khơng thể thiếu trong thị trường vốn của mỗi

nền kinh tế trên toàn cầu bởi các quỹ cung cấp nguồn tài trợ vốn và đầu tư đáng kể
cho các chủ thể khác nhau trên thị trường, đồng thời đóng góp vào sự ổn định của
thị trường. Tuy nhiên, sự tác động mạnh mẽ của đại dịch Covid-19 chưa từng có
tiền lệ trước đó tới tồn thế giới trong đó có thị trường tài chính và ngành quỹ đầu
tư của Việt Nam, đã gây ra sự sụt giảm nghiêm trọng về giá trị danh mục đầu tư của
các quỹ cũng như khiến cho các nhà đầu tư tháo chạy khỏi các quỹ đầu tư, làm trầm
trọng hơn biến động của quỹ cũng như làm suy yếu vai trò ổn định thị trường của

Investment fund volatility during the Covid-19 crisis in Vietnam

Abstract: Investment funds take an indispensable role in the capital market of any economy over the
globe since they provide major sources of financing and investment for various market participants, and
contribute to the stability for the market. However, the unprecedented Covid-19 has catastrophically
hit the entire world including Vietnam’s financial market and the fund industry, specifically causing
drastic plunge in value of fund holdings and investors to flee out of investment funds, magnifying
the volatility and shrinking the market stabilizing role of investment funds. Therefore, examining the
investment fund volatility during the covid-19 crisis in Vietnam could benefit investors, investment
funds, and market regulators in drawing solutions and better preparation in enhancing the resilience
of investment funds as well as Vietnam’s financial market for future unpredictable events. This paper,
by utilizing descriptive statistical tools combined with the aggregating method, finds that Exchange
Traded Funds (ETFs) have proven their resilience better than open-end funds, especially under market

stressed circumstances, and the effect of the Covid-19 on those funds seems to be smoothed out for
later comebacks. Then, to improve the presence and sustainable development of the investment fund
industry in Vietnam, few valuable recommendations have been withdrawn.
Keywords: Investment, Funds, Volatitiliy, Covid-19, Vietnam.
Tran, Thi Xuan Anh
Email:
Nguyen, Quynh Tho
Email:

Ngo, Thi Hang
Email:

Finance faculty, Banking Academy of Vietnam

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các quỹ đầu tư. Do vậy, việc nghiên cứu sự biến động của các quỹ đầu tư trong giai
đoạn khủng hoảng covid-19 tại Việt Nam sẽ mang lại những lợi ích nhất định đối
với các nhà đầu tư, quỹ đầu tư, và cơ quan quản lý thị trường trong việc hoạch định
các giải pháp hiệu quả cũng như xây dựng các phương án chuẩn bị tốt hơn để nâng
cao khả năng chống đỡ cho các quỹ đầu tư cũng như thị trường tài chính Việt Nam

trước các sự kiện khó tiên lượng trước được trong tương lai. Bài viết này, sử dụng
các công cụ thống kê mô tả kết hợp với phương pháp tổng hợp, đã chỉ ra rằng các
quỹ hốn đổi danh mục (ETFs) có sức chống đỡ tốt hơn các quỹ đầu tư dạng mở,
đặc biệt là trong các giai đoạn thị trường căng thẳng, đồng thời tác động của dịch
bệnh Covid-19 tới các quỹ cũng dần ít đi trong các đợt dịch xuất hiện sau đó. Theo
đó, một số giải pháp đã được đề xuất nhằm gia tăng sự hiện diện cũng như duy trì
sự phát triển bền vững của ngành quỹ đầu tư tại Việt Nam. .
Từ khóa: quỹ, đầu tư, biến động, Covid-19, Việt Nam.
1. Introduction
After more than 20 years since its establishment, Vietnam’s stock market has
witnessed a remarkable development path
in terms of market size, diversified products and a stronger investor base. As reported by the State Securities Commission
of Vietnam (SSC), by the end of 2020,
1,655 companies listed their shares on
three Vietnam stock exchanges (including
Hanoi stock exchange - HNX, Hochiminh
City stock exchange - HOSE, and UpCoM), marking a massive increase from
only 2 listed firms at the opening of the
stock market back in 2000 (SSC, 2021a).
This provides investors with a diversified
set of securities along with investment

fund certificates, government & corporate
bonds, and some of the securities derivatives introduced recently, including covered warrants and future contracts.
The market capitalization of all Vietnamese securities markets to GDP peaked
90.43% in 2017 and continued to hit new
records during the period of 2018 - 2020
(Table 1). Particularly, closing the year
2020, Vietnam’s stock market is recognized as one out of 10 global securities
markets with surprising resilience against

the Covid-19 pandemic coupled with the
fastest-recovering speed (Hoa Son, 2021).
Similarly, the Vietnamese securities
market’s liquidity surged to an impressive
record with the average daily trading value

Table 1. Market Capitalization of different securities markets in Vietnam from 2016 to 2020
Unit: Billions of VND
Year

HOSE

HNX

UPCoM

Bond
Markets

Total
Value

%GDP

2016

1,491,778

150,521

306,629

931,340

2,880,268

68.7

2017

2,614,150

222,894

677,629

1,013,833

4,528,506

90.43

2018

2,875,544

192,136

893,777

1,121,307

5,082,674

101.50

2019

3,279,611

192,029

911,940

1,189,085

5,572,666

100.55

2020

4,080,757

212,320

1,000,696

1,385,867

6,679,640

110.64

Source: State Securities Commission of Vietnam (2021a)
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of 7,420 billion Vietnamese dong (VND)
in 2020, increasing by 59.3% compared to
the year 2019 (Hoa Son, 2021).
Other than that, the statutory framework
has been noticeably strengthened with
the first official Law on Securities No.
70/2006/QH11 enacted in 2007, which
was newly replaced by the new Law on
Securities No. 54/2019/QH14 approved
in 2019 and taking effect in January 2021.
This lays a solid legal foundation for
grounding a more sustainably developed
Vietnamese stock market with a higher
quality of market products and market
transparency.
Although Vietnam’s stock market had
been lagged behind regional markets
throughout its development path, it has

risen significantly with positive moves and
achievements since 2018. It has become a
regional bright spot for investment, attracting individual and institutional investors’ attention to foreign ones.
The proactive participation of the institutional investors, especially various investment funds, is believed to considerably
drive a sharp increase in the market capitalization and liquidity, even regardless of
the severe impact of the Covid-19 crisis.

Additionally, according to Table 2, the investor base has also been improved thanks
to institutional investors’ share. The
number of institutional investors’ trading accounts has increased roughly 71%
over the last 5 years. Nevertheless, individual investors still take a dominant share
(remaining at roughly 99.5% throughout
the period of 2015 - Jan, 2021). This
questioned the probability of deteriorating
investors’ herd behavior as well as market volatility, especially against spillover
effects from international economic and
financial events.
Given those facts, investigating the performance and volatility of investment funds
operating in Vietnam plays a crucial role
in finding feasible and appropriate solutions on encouraging the development of
the fund industry to strengthen the investor base and the sustainable development
of Vietnam’s stock market as a whole,
particularly under distressing circumstances such as the Covid-19 epidemic.
2. Current Status of Investment Fund
Industry in Vietnam
Firstly, the investment fund industry is op-

Table 2. Number of approved securities trading accounts in Vietnam from 2015 to Jan, 2021

Unit: one account

Year

Domestic
Individual
Investors

International

Institutional
Investors

Individual
Investors

Institutional
Investors

Total

yoy

2015

1,486,644

6,343

15,221

2,656

1,510,864  

2016

1,685,598

7,438

16,850

2,503

1,712,389

13,3%

2017

1,890,521

8,472

19,696

2,865

1,921,554

12.21%

2018

2,144,735

9,298

24,975

3,319

2,182,327

13.57%

2019

2,332,560

10,119

28,511

3,704

2,374,894

8.82%

2020

2,725,087

11,251

31,134

3,937

2,771,409

16.70%

1/2021

2,811,194

11,413

31,594

3,953

2,858,154

3.13%

Source: State Securities Commission of Vietnam (2021a)

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Table 3. Number of Asset management firms in Vietnam, 2003- 2020
Year

2003 2004 2005

2006

2007 2008 2009 2010 2011 2012 2013 2020

Approved

1

2

6

18

25

45

47

47

47

47

47

51

Operating

1

2

6

18

25

44

46

47

47

47

41

45

Source: State Securities Commission of Vietnam (2021a)

Table 4. Running Investment Funds in Vietnam’s stock market by type until Jan, 2021
Year

Open-end Closed-end Partnership ETFs(a) REITs(b)
Funds
Funds
Fund

Total
Number
of funds

Total NAV(c)

2016

19

1

8

2

1

31

7,759

2017

22

1

10

2

1

36

14,831

2018

25

2

10

2

1

40

22,485

2019

32

2

10

2

1

47

32,603

2020

34

2

13

7

1

57

57,693

1/2021

34

2

13

7

1

57

62,042

Note: (a) – Exchange Traded Funds; (b) – Real Estate Investment Trusts; (c) – Net Asset Value in trillions
of VND
Source: State Securities Commission of Vietnam (2021a)

erating with increasing, yet underperforming fund managements. The rising attraction of Vietnam’s stock market has also
triggered investors’ demand for professional financial services, especially investment consultancy, and investment management related reservices. These services
are offered by asset management companies with qualified investment experience
and profound local knowledge, leading to
an increase in the number of management
companies established in Vietnam.

While up to 2004, Vietnam’s stock market
operated with only 7 brokerage firms and
2 asset management companies. The situation changed quickly, with 47 management companies managing over 100,000
billion VND in 2012 and falling to 41
firms as of 2013 (Table 1).
The rocket jump in the number of brokerage firms and their branches and management companies called for a closer
supervision process and actions from
market regulators, resulting in the ap-

Figure 1. Asset under management in all existing management companies in Vietnam
from 2012 to June, 2020
Unit: Billions of VND, Source: Nguyen Hai Nam (2020), SSC (2021a)
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Biến động quỹ đầu tư trong cuộc khủng hoảng Covid-19 ở Việt Nam

Table 5. Number of listed issuers in Vietnamese stock market, by securities types (updated
in March, 2021)
Year

Firm shares

Investment Fund
Certificates
Closed-end
ETF
Funds

HOSE

HNX

UPCoM

Total

2015

307

377

256

940

1

2

2016

320

375

414

1,109

1

2017

344

384

694

1,422

2018

373

376

804

2019

378

367

2020

392

353

Covered
Warrants
(CW)

Bonds
HNX

HOSE

0

0

35

2

0

0

35

2

2

0

0

39

1,553

3

2

0

0

48

872

1,617

3

2

37

2

43

910

1,655

3

7

118

2

33

Source: State Securities Commission of Vietnam (2021a)

Table 6. Volume of securities listed and traded in Vietnamese stock market,
by security types (updated in March, 2021)

Unit: millions of shares

Year

Stocks Government
Bonds

Corporate Bonds
HOSE

HNX

UPCoM

Fund Shares
ClosedETF
end

CW

Total

2015

53,080

7,530

86

0

5,060

38

0

0

65,800

2016

60,380

9,300

95

0

14,820

41

15

0

84,650

2017

71,820

9,980

160

0

24,710

180

20

0

106,870

2018

88,710

10,860

350

0

31,920

310

37

0

132,150

2019

97,840

11,520

340

25

41,840

470

37

98

152,170

2020 112,360

13,570

260

25

38,130

850

37

437

165,670

Source: State Securities Commission of Vietnam (2021a)

proval of several circulars and decisions
related to those financial institutions. Of
which, Ministry of Finance enacted the
first official regulation on the operation

of the asset management firms (Circular
No. 212/2012/TT-BTC) under the “Securities Market and Insurance Companies
Restructuring” Scheme (issued in Decision No. 1826/QD-TTg, 2012) in an effort
of improving these intemediaries’ quality and raising investors’ trust in tandem
with boosting their participation into these
managements’ funds. Eventually, during
the period of 2013 - 2014, 6 management

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firms, accounting for 12% of total firms,
ended their operations. These strict moves
by regulators have significantly gained
much attention of the public and their trust
in accessing collective investment vehicles
(such as various investment funds) provided by the fund management companies.
As illustrated in Figure 1, by the mid of
2020, there were 45 normally operating
management firms and 4 other underrestructuring-process firms, managing a
total asset value of 358,000 billion VND,
a threefold increase from the statistics
recorded by the end of 2015 (Nguyen Hai

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Table 7. Performance of closed-end funds, by the percentage of difference between
market price and net asset value per share from 2006 to 2011

Unit: in percentage (%)

Closed-end Funds

2006

2007

2008

2009

2010

2011

VF1

+14.45

-28.33

-54.60

-43.77

-46.38

-46.38

BF1

n/a

-21.34

-50.75

-33.87

-31.37

-39.52

MPF1

n/a

+8.29

-50.75

-33.87

-31.27

-39.52

VF4

n/a

n/a

-52.50

-21.79

-34.02

-44.84

VFMFA

n/a

n/a

n/a

n/a

+3.17

-28.66

Note: “+” sign implies that market price is higher than NAV (premium), “+” sign implies that
the market price is lower than NAV (discount)
Source: Nguyen Thu Thuy (2012)

Table 8. Annual Performance of Various Investment Funds in Vietnam from 2014 to 2020
2014

2015

2016

2017

2018

2019

2020

VN-Index

8.1

6.1

14.8

48.0

-9.3

7.67

14.87

Open-end

SSI-SCA

1.8*

17.7

24.1

38.2*

-12.1*

3.91*

18.61

Open-end

VFMVF1

9.0

13.6

15.0

44.84*

-9.6*

10.61

25.23

Open-end

VFMVF4

6.1*

19.9

16.38

46.2*

-11.7*

17.84

26.8

Open-end

VFMVSF

-23.8*

n/a

Open-end

VFMVFB**

15.74

6.32

9.53*

15.94*

11.25

9.15

n/a

ETF

SSIAM VNX50 ETF

13.1

11.0

3.6*

60.4

-7.1*

6.04*

22.95

Fund Type

Year

Note: Unit: in percentage, * for year that the fund underperformed the market index, ** VFMVFB
is a bond fund while all other funds mainly invest in stocks; Shaded cells refers to years that this fund was
not established yet;
Source: SSI (2021), Dragon Capital (2021)

Nam, 2020).
However, the performance of those asset
management firms seems to not keep pace
with the achievements in aspects of quantity and assets under management aforementioned. Completing the year 2009,
merely 14/46 management firms could
mobilize enough capital for establishing
their investment funds, and that statistics
was 13/47 as of 2010 (Nguyen Thu Thuy,
2012). The problem remains unsolved
after roughly 10 years. As reported in
Nguyen Huu (2019), 19 out of 45 operating asset management companies, since

establishment, carry neither investment

portfolio management services nor investment funds which are the key mainline
products formulating the role and the importance of the management firms in the
securities market. Again, this should be
taken into market regulators’ consideration
to preserve the quality of fund managment
firms and the sustainable development of
the securities market as a whole.
Secondly, investment funds grow with
more-diversified fund types, yet in imbalanced development. The investment fund
industry, officially putting first steps in
Vietnam’s stock market since 2003, is
considered a young market with numerous

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room for further development. The number of funds tailored by management firms
has witnessed a significant increase from
only 2 funds in 2005 to 16 and 23 funds in
2007 and 2010, respectively (Nguyen Thu
Thuy, 2012). However, fund types are still
less-diversified in serving investors’ various needs and risk appetites. Most of these
funds are closed-end funds, and the rest
are partnership funds.

In pursuing a more-developed investment fund industry, new fund types have
been introduced to the market with firm
statutory frameworks and regulations in
2012, including open-end funds, Real
estate funds (REITs), ETFs. Of which, the
proactive participation of open-end funds
and ETFs over the years has conveyed
vast contribution to the market liquidity, investor base coupled with providing
diversified investment choices for investors, especially individual investors, which
in turn raises the need for new open-end
fund and ETFs, lifting the fund industry.
As of December 2020, the total number
of funds operating in Vietnam has soared
to 57, including 34 open funds, 2 closed
funds, 13 partnership funds, 7 ETFs and
1 real estate fund, managing the total net
asset value (NAV) of over 62 trillion VND
(approximately $2.7 billion USD) (Table
4) (SSC, 2021a). Newly-established ETFs
have especially attracted capital inflows
from regional markets as Thailand and
South Korea, which poured significant
investment capital into Vietnam’s stock
market, creating positive sentiment for the
market (Vietnam News Agency, 2020).
However, there seems an imbalance in the
development path of different fund types
with: (1) the open-end catergory taking the
dominant market share over other funds in
terms of fund numbers thanks to their flexible fund share issuance and redemption as

30

well as their wide sets of asset allocation
strategies (Table 4); (2) number of funds
listing their shares on stock exchange fall
heavily behind stocks, covered warrants
and bond issuers (Table 5 & 6), impeding
the investment fund industry from approaching potential investors in the numerous and rising secondary market.
Aside from a limited number of funds plus
investors’ investment habits being prone
to self-investment rather than authorizing
via management companies, investment
funds’ weak and unstable performance
is another important element hindering
investors from allocating their idle capital
into investment funds.
The exit of closed-end funds in Vietnam’s
stock market in the past was, if not because of reaching the end of the fund life,
due to their disappointing performance
with their fund shares’ market price being sharply discounted from the net asset
value per share, ranging from over 20%
to roughly 60% (Table 7) (Nguyen Thu
Thuy, 2012). Although the erection of
open-end funds and ETFs in the market, compared to closed-end funds, have
brought new hopes on better performance,
their performance (except for big funds as
SSI-SCA and VFMVFI run by SSI Management and Vietnam Fund Management),
especially in terms their ability to beat
market index during periods of turmoil,

seems to be weak and quite turbulent
(Table 8).
This poses a concern towards investment
fund’s volatility during distressing periods, specifically requiring a closer look
over the funds’ performance during shorter time frames rather than just looking at
flattened annual statistics. In particular,
the bearish market’s impact on the fund’s
asset allocation and the fund rigidity in
adjusting its allocation strategies could

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magnify the fund’s weak performance
during market downturns. Afterward, this
could dry out fund investors and indirectly
affect individual investors’ trading behavior, causing drastic washouts in the market
and finally severely damaging the entire
market. Therefore, again, examining the
volatility of investment funds, especially
those with large market shares in the industry like ETFs, Open-end funds (Table
5), provides valuable and viable solutions
to minimize the fund industry’s volatility lure investors’ capital into investment
funds is crucial.
3. Methodology and Data
By adopting the research approach of Congressional Research Service (2020), the
volatility of investment funds in Vietnam
will be observed in different aspects depending on types of investment funds. As

aformentioned discussion, for the recent
rising prevalence of ETFs and open-end
funds in Vietnams’ fund industry, the volatility of those fund types will be analyzed
as representative cases. For ETFs, these
funds provide investors with investment
opportunities into funds in both primary
market (transactions executed with NAV
per share, which is calculated by taking
total assets under managment of an ETF
fund minus its total liabilities and then
divided by the outstanding number of ETF
shares) and secondary market (transactions
executed with market price determined by
the supply and demand of ETF shares on
stock exchanges). Therefore, the volatility of ETFs could be witnessed through
the divergence of the market price from
the NAV. To do this, time series of NAV
per share and market price of ETF funds’
shares are collected. For open-end funds,
for their special feature of containing no

secondary market for investors’ trades,
there is no market price for any single
open-end funds, and then, the volatility
will be examined on NAV movements
only.
Due to limited access, we have to reply on
two sources of daily database: (1) public
database available on websites of investment funds (investment funds of SSI
Asset Management, VanEck Vectors, and

Vietnam Fund Management - VFM); (2)
internal and confidential database provided
by an anonymous brokerage firm for the
confidential purpose (all other ETFs). The
data is gathered from February of 2018 to
February of 2021.
As for data processing method and data
analyzing techniques, this paper employs
descriptive statistical tools combined with
the aggregating method and qualitative
analysis to assess those funds’ volatility
during different Covid-19 waves occuring
in Vietnam.
4. Volatility of Investment Funds in
Vietnam under the Covid-19 Pandemic
4.1. Exchange Traded Funds (ETFs)
Exchange-traded funds (ETFs) are considered as cheaper and effective alternatives
to mutual funds when considerable market
volatility exists (Congressional Research
Service, 2020). Since ETFs first appeared
in Vietnam in 2008, these investment
vehicles have become more and more
popular in the market due to their diverse
portfolio and low transaction costs.
By the end of 2020, there were 3 active
ETFs in the Vietnamese stock market,
including seven domestic ETFs and six
foreign ETFs (Table 9). The first foreign
ETF was FTSE Vietnam Swap UCITS
ETF (set up in 2008), followed by VanEck

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Table 9. Statistics of ETFs in Vietnam Stock Market by March, 2021

Unit: Billions USD

Name of fund

Ticker

Benchmark

Type

Inception Beginning Ending
year
NAV
NAV

FTSE ETF

FTSE

FTSE VN

Foreign

2008

5.1

394

VNM ETF

VNM

VanEck VN

Foreign

2009

14

457.29

MSCI

Foreign

2012

11.4

418.5

Domestic

2014

9

332

Foreign

2016

163

189

Domestic

2017

3.6

9.1

Foreign

2019

21

30.9

iShare Frontier Vietnam iShare
VFMVN30 ETF

E1VFVN30 VN30

KIM ETF

KIM ETF

SSIAM VNX50 ETF

FUESSV50 VNX50

Premia MSCI Vietnam

PREMIA

VFMVN Diamond

FUEVFVND VNDiamond

Domestic

2020

4.5

224

SSIAM VNFIN Lead

FUESSVFL VNFINL

Domestic

2020

9.4

47.66

VinaCapital VN100

FUEVN100 VN100

Domestic

2020

2.5

3.6

SSIAM VN30 ETF

FUESSV30 VN30

Domestic

2020

2.4

2.8

Mirae Asset VN30

FUEMAV30 VN30

Domestic

2020

n/a

n/a

Foreign

2020

8.3

13.52

Kindex Vietnam VN30
368470 KS
Futures Leverage

VN30
MSCI VN

VN30

Source: State Securities Commission of Vietnam (2021)

Vectors Vietnam ETF (launched in 2009).
Over the years, the size of total assets
managed by ETFs has increased dramatically. Starting with an initial total asset
of only 5.1 billion USD, the entire asset
value of FTSE Vietnam ETFs has reached
394 billion USD by March 2021, increasing its value by 77 times. Those of another
oldest ETFs in Vietnam, VNM VanEck
Vectors Vietnam ETF, has risen from 14
billion USD to 457 billion USD, increasing its value by 32.6 times.
Domestic ETFs were established later.
The first domestic ETF in Vietnam,
VFMVN30, was established in 2014 with
an initial asset value of 9 million USD. Its
total asset also increased rapidly to 332
million by the end of 2020, changed 35.7
times. VFMVN30 is currently considered as the biggest domestic ETF in the
market at the moment. Recently a series
of domestic ETF funds were founded. In

32

2020, there are five domestic ETFs newly
launched, accounting for 70% of the total
domestic ETFs operating in Vietnam.
According to VNDirect Securities Company (2020), the total asset value of all seven
domestic ETFs by the end of 2020 was
480 million USD. Noticeably, VFMVN
Diamond Fund has developed extremely
fast. Launched on May 2020 with an
initial asset value of 4.5 million USD, it
increased its value by 49.7 times to 224
million USD, becoming the second-largest
domestic ETFs in Vietnam.
ETFs’ shares can be traded as stocks on
stock exchanges at market price which
could be different from its underlying portfolio’s NAV per share, leading to a high
probability of ETF’s liquidity mismatch
- a threat to financial stability (Congressional Research Service, 2020). An ETF gap
with premium to NAV implies that ETF
shares are worth more than their underly-

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Figure 2. Correlation between VN-Index, number of confirmed cases, and deaths from Jan,
2020 to August, 2020
Source: Bloomberg (2021), KB Securities Vietnam (2020)

Figure 3. Phase 0: ETF NAV Gap before Covid-19 pandemic
Source: Authors’ calculations from database provided in Bloomberg (2021), SSI (2021), VanEck (2021),
Dragon Capital (2021)

ing holding, and vice versa. This situation
would not occur under normal market
conditions.
During waves of Covid-19, the market
has reacted in different ways. There was a
correlation between VN-Index, number of
confirmed coronavirus cases, and deaths
(Figure 2).
Similar to VN-Index’s reaction, the volatility of ETFs’ share varied during periods
of market turbulence. To clarify the response of ETFs, we investigate the volatility of ETFs in 4 different phases: Phase 0:
before Covid-19: before November 2019;
Phase 1: the first wave of Covid-19: from
December 2019 to May 2020; Phase 2: the
second wave of Covid-19: from June 2020

to November 2020; Phase 3: the third
wave of Covid-19: from December 2020
to February 2021
Before the Covid-19 crisis, ETF shares
traded smoothly on Vietnam stock exchanges. The deviation of ETFs’ price
from its NAV was relatively small in the
range of -/+ 5% (Figure 3).
Wave 1st: No experience - Huge volatility
The market witnessed strong fluctuations of ETFs’ NAV gap during the first
wave of Covid-19 in March 2020. This

period was considered the most challenging investment period in the history
of many investors. As this was the first
time the Covid-19 outbreak in Vietnam,

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Biến động quỹ đầu tư trong cuộc khủng hoảng Covid-19 ở Việt Nam

investors had no experience dealing with
such unprecedented market volatility. The
divergence between ETF price and NAV
in this phase was huge. The sudden hit has
negatively impacted investors’ behavior
and weakened ETFs’ NAV and price.
A lot of ETFs shrunk due to the Covid-19
outbreak. Some funds even fell by 20%
since the beginning of 2020 (Van Anh,
2020). The largest local fund management
company, VietFund Management (VFM),
paid 304.35 million USD to avoid the
shock, but it did not work well. Most of
VFM’s investments lost their value.
Following the general trend on the stock
exchange during the first wave of Covid-19, the two major ETFs (VNM ETF
and FTSE Vietnam ETF) also had a bad
performance. The biggest foreign ETF
on Vietnam Stock Market, VNM ETF,

recorded a capital outflow of 9.94 million USD on 20 March 2020 when the
Covid-19 situation in Vietnam became
significantly worse. From the beginning of
2020 to 23 March 2020, the total cash outflows of VNM ETF were approximately
25 million USD (Fili, 2020). At the peak,
VNM ETFs saw their widest discounts of
-10.11% to their NAV. VFMVN30 ETF,
the biggest domestic ETFs in Vietnam,
also saw a decline of 18.21% in NAV per
share on 12 March 2020 and recorded
their widest discounts of -10.12% to their
NAV.
Wave 2nd & 3rd: Minor volatility
During the second wave of Covid-19, the
market’s response differed from those
of the first wave. This time marked an
unexpectedly successful period for big
investment funds in Viet Nam. Despite the
resurgence of Covid-19 and the economic
index’s slow recovery, the stock market
moved positively. Some argued that this

34

was because the Vietnamese government
applied good policies to control the disease. The interest rate was also set approximately 2% lower, encouraging short-term
cash flows, triggering an investment wave.
Since the resurgence of community Covid-19 transmission in Danang on 24 July
2020, the stock market has faced a gloomy
period. Most ETFs recorded good performances. Along with the growth of the

VN30 index, NAV per share of domestic
ETFs grew. NAV per share of VFMVN30
ETF rose 21.8%, followed by SSIAM
VNX50 (increased 21.4%). Foreign ETFs
also had a positive performance. In particular, FTSE Vietnam ETF, Premia MSCI
Vietnam ETF, VNM ETF increased 16%,
14%, and 9.2% respectively. However,
there was no big gap between ETF shares
and the NAV of their holdings (Figure 5).
The investors have had knowledge and
experience to deal with this unexpected
event after the first wave of Covid-19.
According to the HOSE report (2020),
a series of domestic ETFs were newly
founded in this period, including VFMVN
Diamond, SSIAM VNFIN Lead, VinaCapital VN100, SSIAM VN30 ETF,
Mirae Asset VN30. These ETFs attracted
a massive amount of capital and have
become a source of support for the market
during difficult periods.
In the second half of 2020, the capital
inflow to Vietnam ETFs increased dramatically despite the bear market in March
and April. In July, the major ETFs on the
market together attracted 21.3 million
USD. The biggest foreign ETF, VNM
ETF, attracted 9.16 million USD, while
the largest domestic ETF in the market,
VFMVN30 ETF, drew 2.8 million USD.
The proportion of Vietnamese stock in
ETFs portfolio increased, accounting for

nearly 70% of the portfolio. FTSE Viet-

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Figure 4. ETF NAV Gap during the first wave of Covid-19
Source: Authors’ calculations from database provided in Bloomberg (2021), SSI (2021), VanEck (2021),
Dragon Capital (2021)

Figure 5. ETF NAV Gap during the second wave of Covid-19
Source: Authors’ calculations from database provided in Bloomberg (2021), SSI (2021), VanEck (2021),
Dragon Capital (2021)

Figure 6. ETF NAV Gap during the third wave of Covid-19
Source: Authors’ calculations from database provided in Bloomberg (2021), SSI (2021), VanEck (2021)

nam ETF also attracted 2.8 million USD
only in July. Other domestic ETFs such
as VFMVN Diamond ETF and SSIAM
VNFin Lead ETF drew 3.2 million USD

and 4.3 million USD in the second half
of July, respectively. In December, the
capital inflow to ETFs reached 140 million
USD, mostly going to VFMVN Diamond

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Biến động quỹ đầu tư trong cuộc khủng hoảng Covid-19 ở Việt Nam

ETF and FTSE Vietnam ETF. Although
VFMVN Diamond ETF was newly established in May 2020, it quickly became
a target for foreign investors. VFMVN
Diamond ETF was considered the most
effective fund in 2020, with the growth of
NAV per share of 69.7%. The fund’s size
increased 49.7 times in only seven months
from inception, becoming the second-biggest domestic fund in Vietnam.
Similarly, during the 3rd wave of the Covide-19 epidemic, little volatility was observed in ETFs’ performance. Following
the bullish trend, ETFs attracted around
135 million USD. The pandemic did not
affect the market volatility much. The gap
between ETFs’ share price and the NAV
of their holdings was much smaller. The
ETFs ecosystem has proved its resilience
despite the high market volatility caused
by the pandemic (Figure 6). The actual
experiences of ETFs have shown that the
ETFs ecosystem remained strong and
functioned well.
In short, during the height of financial
market stress, contrary to the pessimistic
predictions, ETFs’ volatility has been
smoothed out. In the first wave, the divergence of ETFs’ price and NAV was huge
due to investors’ fragile manner. After

having experiences dealing with unexpected events, the gaps narrowed down,
the market became more stable, and the
liquidity mismatch level was also lower.
ETF performance throughout the market
volatility demonstrated how ETFs could
add stability to capital markets. ETFs
did not increase market volatility during
the Covid-19 crisis, instead, they were a
source of stability as investors increasingly turned to ETFs to efficiently rebalance
holdings, hedge portfolio and manage
risk. Throughout the pandemic and resulting market volatility, investors increas-

36

ingly turned to ETFs to allocate capital
and manage risk in their portfolio. ETFs
generally functioned well and delivered on
investor expectations crisis despite facing
the most turbulent market conditions of
the Covid-19.
4.2. Open-end Funds
Different from other fund types such as
closed-end funds and ETFs, open-end
funds do not list their fund certificates
(fund shares) on the stock exchange and
only allow investors to conduct fund share
purchases and sales directly with the fund
management (SSC, 2021b). Then, there
is no stock exchange for open-end fund
shares nor the market prices. Therefore,

the volatility of open-end funds is exclusively observed with NAV movements
over time.
For the first wave of the Covid-19, similar to ETFs, all of the open-end funds got
hit by the Covid but in different magnitude. Vietnam Fund Management (VFM),
although widely recognized as the largest
domestic management firm in Vietnam’s
stock market with over 7.000 billion VND
under management and good performance
records of running its funds, could not
avoid the hit from the covid epidemic in
the first wave with most of their funds’
holdings losing value going along with the
market.
In particular, according to Dragon Capital
(2021) while VFMVF1 with 414 billion
VND ($18 million) fund size, experienced
NAV per share (NAV) falling by 16.18
percent compared to the beginning of the
year, the other VFM fund with a smaller
investment scale of 99 billion VND ($4.3
million), VFMVF4, was hit harder and
recorded a slash of 20.21 percent, worse
than a 19.95 percent decrease in the

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VN-index of Ho Chi Minh City Stock

Exchange (Figure 7). It could be seen that
despite lower investment value, VFMVF4
still witnessed a drastic fall in NAV per
share than VFMVF1. This is because of
their difference in asset allocation strategies. Unlike VFMVF4 - an equity fund,
being a balance fund investing in both
equity and debt securities, VFMVF1 was
less damaged and volatile.
On the other hand, VFMVSF and VFMVFC with smaller investment value (35
billion VND and 2.5 billion VND, respectively), investor size, and the majority of
their holdings falling into debt securities
and certificates of deposit, suffered less
losses than VFMVF1 & VFMVF4 with
their NAV falling by only 13.75 and 2.12
percent (Van Anh, 2020).
Especially being a bond fund, VFMVFB
proved its resilience against shocks in the
stock market as its NAV per share, from
the beginning of the year to mid-March,
grew by 2.02 percent (Table 8).
The 2nd and 3rd phases of the Covid-19
crisis still slightly dragged down the
operation of open-end funds but within a
shorter time, about a half month since the
beginning of the reoccurrence (Figure 8).
The entire country and the fund industry
have had experiences from the first wave
of the Covid-19, the high alerted 2nd Covid -19 detected in July 2020 was quickly
under control. As a result of successfully
containing the Covid-19 outbreak in line

with financial support via the State Bank
of Vietnam’s monetary policy on cutting
interest rates to support businesses and
the economy, Viet Nam’s reputation as an
attractive and safe investment destination
has been cemented. Investors’ panic was
settled down, and the fund also restructured its asset allocation, with the number
of target stocks cutting down to 28 - 32

from 35 - 40 (Vietnam news agency,
2021). These explained the minimized
change in NAV per share of open-end
funds during these periods.
In a nutshell, similar to ETFs, the impact of the unprecedented Covid-19 on
open-end funds in Vietnam was recorded
to be tremendously negative during the
first presence of the pandemic, especially
has weighted heavily on larger funds and
funds with main holdings of listed shares,
but seems to be smaller in magnitude for
later comebacks. Moreover, open-end
funds seem to be more volatile compared
to ETFs, as mentioned earlier. So, the
consideration of nurturing the flourishing
of ETFs is worth looking to stabilize the
market and investors’ trading behavior.
5. Concluding remarks, policy recommendations and future research path
Our paper contributes to the recent literature on how the Covid-19 crisis has
affected different segments of the financial
market in general and capital market in

particular and literature on the investment
fund industry. The paper has found out
that: (1) the investment funds and fund
management companies are increasingly
proving their importance in the capital
market in providing investors with diversified collective investment vehicles superior to bank savings and strengthening the
Vietnamese stock market’s investor base
towards a rising proportion of institutional
investors to reach a more stable market
against shocks; (2) Under the Covid-19
crisis, ETFs proved to be more resilient
than open-end funds and were additive to
the overall functioning of markets; (3) As
for open-end funds, bond funds and funds
with smaller holdings of listed shares on
major stock exchanges seem to be safe

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Biến động quỹ đầu tư trong cuộc khủng hoảng Covid-19 ở Việt Nam

Figure 7. Fluctuations on the NAV per share of the two biggest open-end funds
from June, 2019 to March, 2021
Source: Authors’ calculations from database provided in Dragon Capital (2021)

Figure 8. A closer look on NAV of open-end funds
during 2nd & 3rd wave of the Covid-19

Note: Historical data of SSI-SCA’s NAV per share is available only from July, 2020
Source: Authors’ calculations from database provided in Dragon Capital (2021), SSI (2021)

investment spots.
In Vietnam, there has been estimated
to be 19.000 investors participating in
investment funds (Review of Finance,
2018), accounting for a modest number
compared to 2.2 million investors in the
Vietnam stock market by the end of 2018.
Therefore, there is numerous room for the
development of both asset management
firms and investment funds.
In addition, the need for exchange-traded
products classifications has underscored.
Without clear classification, it is difficult

38

for investors to distinguish among different exchange-traded products in terms of
structures and risks. Therefore, ETF has
become a blanket term for any product
that offers exchange-tradability. In fact,
many products labelled as “ETFs” have
characteristics different from the type of
product most commonly associated with a
benchmark index, exposure to the creditworthiness of the issuer of the underlying
debt. As a wider range of end-investors
turn to exchange-traded products, it is becoming increasingly important to protect

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investors by helping them acknowledge
the wide range of structures and risks associated with the products, understand the
way such products behave during periods
of market volatility and the risks involved.
An exchange traded product classification
system will better serve end-investors by
providing more clarity on the specifics of

these products as well as help policy makers and regulators focus their efforts.
Hence, market regulators should keep eyes
on: (1) attracting investors pouring their
money into investment funds by applying
tools and approaches to raise investors’
awareness of investment funds and asset
xem tiếp trang 82

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tiếp theo trang 39

management firms; (2) encourage the establishment of ETFs by, (2a) encouraging
big brokerage firms to be proactive authorized participants in the primary market of
ETFs to support the creation and liquidity
of ETF certificates, (2b) offering favourable tax policy such as tax-exempt for
ETF certificate redemption in the primary
market as seen in international markets
since these redemption trades are exclusively done by exchanging sets of assets,
no cash involved; (3) assist end-investors
with clarity on the specifics of exchange
traded products to avoid exposure to the
creditworthiness of the issuer of the underlying debt.
This paper, due to limited access to the
internal database, has just tapped on the

volatility of Vietnam’s investment funds
in aspects of NAV changes and divergence
of fund shares’ market price from their
NAV along with fragmented data on fund
flows. For the inherent features of funds
with periodically varying capital inflows,
outflows, and fund holdings, the assessment on investment funds’ volatility could
be remarkably stronger if a closer look at
those aspects is taken with a wide range
of higher frequency datasets (monthly,

82

daily). This, afterward, will provide considerably strong sources of proxies for the
quantitative approach with event study and
other econometric models to provide more
objective evaluations. ■

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