Persistent Capital Flows Direction towards Open-ended Funds
On a high note, open-end funds managed to draw in VNĐ700 billion in the initial three months of 2025. Amidst the tremors of the US tariff change, this investment route remains the sole category steadily retaining capital inflows since the last quarter of 2023.
Sure, let's dive a little deeper into this financial trend. According to Dõ Hòng Vân, from FiinGroup's Data Analysis Division, equity funds experienced the strongest pressure of capital withdrawal. In Q1 2025 alone, net withdrawals from equity funds reached an alarming VNĐ5.3 trillion (approximately $20 million USD), double the amount of the previous quarter.
March, in particular, saw five consecutive months of net withdrawals, marking the strongest capital withdrawal value throughout this period. With open-end funds being the only exception, they continued to attract capital, led by Dragon Capital's VFMVSF, which focused on banking and retail stocks such as MWG and CTG.
Open-end funds' persistence in showing net inflows, despite a significant decrease when compared to the average of VNĐ3.3 trillion per quarter in 2024, highlights the conservative mindset of institutional investors. The domestic stock market has displayed vulnerability to external factors, particularly the US reciprocal tax policy.
Now, let's shed some light on what's happening behind the scenes. In rapidly changing markets, individual investors with minimal expertise or experience can easily fall victim to extreme psychological states. Quick sales in times of uncertainty and sudden purchases during market recovery can lead to poor investment outcomes for these individuals.
On the other hand, investment funds offer various advantages. These funds boast teams of seasoned, highly specialized experts and meticulous investment approaches. This enables investment funds to stand strong amidst market fluctuations and deliver positive performance in the medium to long term.
To illustrate, just before the unexpected tariff policy announcement by US President Donald Trump in early April 2025, most investment funds were proactive in adjusting their portfolios to cap risks. As a result, up to 19 out of 31 open-end equity funds increased their cash ratio compared to the preceding month in March 2025.
Open-end funds have maintained their capital attraction, with a net inflow of VNĐ700 billion in the first quarter of 2025. Photo cafef.vn
In conclusion, open-end funds have been successful in maintaining capital inflows because of their diversified strategies, favorable market conditions, and investors' preference for a broader market exposure. Meanwhile, the plot thickens for ESG funds, as they grapple with backlash, criticism, and regulatory challenges.
The continuous inflow of capital into open-end funds, despite external market pressures, such as the US tariff change, can be attributed to their diverse investment strategies and broad market exposure. AI and finance sectors are closely monitoring this trend, as investment funds' meticulous approaches and seasoned experts have proven to deliver positive performance in fluctuating markets. In contrast, individual investors might face challenges due to lack of expertise, leading to poor investment outcomes during market instability. This highlights the importance of AI in analyzing financial markets and providing guidance for better investment decisions.
