In this final section, I will share some specific suggestions on which funds I will invest in, and why I invest in those funds. And before sharing this information, I would like to pass on the following note:
‼️ DISCLAIMERS :
- The shares in this series of articles are the personal views of the author. This is the knowledge that the author has researched and synthesized from many different sources.
- The writer is not a financial expert or professional investor.
- This information is relevant to the writer and may not be relevant to all readers.
- The information presented in this article does not take into account the investment objectives, risk tolerance or financial circumstances of any particular reader.
- The stock codes mentioned in the series (if any) are for illustrative purposes only (examples), and are absolutely not intended to recommend or call for investment in those codes.
- All investment activities will have risks, readers need to consider investment decisions very carefully and take full responsibility for those decisions.
1. Index Fund or ETF
The way we do Passive Investing is to invest in Index Fund or ETF , so which fund will we choose in one of these two funds? Usually in the investment world, for the long-term Passive Investing strategy, people will tend to invest more in Index Fund for the following two reasons:
- Index Fund will help us avoid transaction fees. As for ETF, due to its nature as a stock code, when making a transaction, you have to pay transaction fees to Brokers. These fees are not really too much, but because we invest for a long term of several decades, the number of transactions is not small, if added up, the transaction fees are also a significant number.
- Index Fund will help us more easily implement the “Fire & Forget” strategy, because when investing in Index Fund, this investment will be in the fund and out of our sight, plus buying and selling Index Funds is quite complicated, so it can help us “forget” it, helping us limit touching these investments.
There are many other reasons, but in short, those are the two main reasons why in the long term, people tend to invest more in Index Funds. However, ETFs are not too bad and I personally recommend you to invest in ETFs, the reasons are:
- Most of you reading this series of articles are new to the stock market, maybe never invested in the stock market. And because ETFs are listed on the stock market, investing in ETFs will help you get acquainted and approach the forms of buying and selling on the stock market. From there, it can help you gradually get used to other investment activities on the stock market, helping you have a foundation for learning about active investment strategies such as Dividend Investing , Growth Investing, Value Investing.
- The second issue is fees. In this early stage, the number of transactions you make will probably not be much, so this fee will not be significant. Not to mention, the cost of investing in ETFs will be easier than investing in Index Funds because ETFs do not have a minimum investment limit.
- Basically, the growth factors of Index Fund and ETF are not too different, so investing in Index Fund or ETF in terms of growth is the same.
- In terms of psychology, with Index Fund, we will have an easier time “Fire & Forget”, but with ETF, we can see our investments grow gradually, thereby bringing joy and excitement when seeing our investments are working effectively. This aspect is more personal, each person has their own personality.
So which fund management company should we choose? There are a few factors to consider when choosing a fund management company, specifically as follows:
- Management fee: as low as possible.
- Performance: the ability to accurately track the metrics that need to be tracked.
- Management: organization and operation without conflicts of interest.
- Reputation: check if the company has any scandals.
2. Passive investment funds in the US market
First, we will learn about passive investment funds in the US. I chose the US because it is the largest and most stable market in the world. And the company I mentioned is Vanguard . This fund was founded by the so-called father of the Passive Investing strategy, his name is John Bogle. You can learn more about him on Google.
The reason I chose Vanguard is because it is a company that has funds with the lowest management fees on the market. The second reason is that the way Vanguard operates and the way it is structured is very different from other funds, this difference helps the interests of fund managers and the interests of investors not conflict with each other.
For those reasons, if you are living in a country where Vanguard operates, you should learn about and invest in Vanguard. The problem is that not every country has Vanguard and Vietnam is one of the countries where Vanguard does not operate.
But it’s okay, you can learn about Vanguard first because sooner or later the Vietnamese stock market will have to integrate with the world, and I believe that in the near future, Vanguard will also come and invest in Vietnam, at that time you can immediately make investment decisions without having to learn more.
Below are some Vanguard stock and bond funds that I find very good, you can refer to them:
Figure 1: Reputable passive funds managed by Vanguard
3. Passive investment funds in the Vietnamese market
If we only have Vietnamese nationality, we cannot buy securities in foreign markets, so in this section I will introduce some passive investment funds in the Vietnamese market for your reference. Here are some criteria for choosing passive funds:
Figure 2: Passive funds and management fees (%) of funds issued by fund management companies in Vietnam
3.1. Criterion 1: Size and reputation of the fund management company
There are currently 4 fund management companies with ETFs listed on the stock market:
3.1.1. Dragon Capital Vietnam Fund Management Joint Stock Company (DCVFM)
DCVFM was established based on comprehensive cooperation between two leading financial institutions in Vietnam, Dragon Capital and Vietnam Investment Fund Management Joint Stock Company. Preliminary information about DCVFM is as follows:
- Total assets: Nearly 943 billion (According to financial report of the 4th quarter of 2021 )
- Established in 1994, it has been accompanying and developing with the Vietnamese economy for more than 26 years. This is also one of the fund management companies with the longest history of operation in the Vietnamese capital market.
- Investment segments: DCVFM is offering customers a variety of investment products, from open-end funds (DCIP Fund, DCDS Fund, DCBC Fund), ETF funds (VFMVN30 ETF Fund, VFMVN DIAMOND ETF Fund), Pension funds, periodic investment programs and portfolio management services.
3.1.2. VinaCapital Fund Management Company (VCFM)
VCFM is a 100% owned member of VinaCapital Group, one of the largest investment and asset management groups in Vietnam. Preliminary information about VCFM is as follows:
- Total assets: More than 264 billion (According to financial report of the 4th quarter of 2021 )
- Year of establishment: 2012
- Investment segments: VCFM is providing portfolio management and consulting services, potential open-end fund investment products to serve different investment needs of customers. Some open-end funds such as: VEOF, VFF, VIBF, ETF VinaCapital VN100.
3.1.3. SSI Fund Management Company Limited (SSIAM)
SSIAM is a one-member limited liability company 100% owned by SSI Securities Corporation, one of the leading securities companies in Vietnam, providing fund management and portfolio management services to individual and institutional clients to preserve and increase the value of their assets. Preliminary information about SSIAM is as follows:
- Total assets: Nearly 220 billion (According to financial report of the 4th quarter of 2021 )
- Year of establishment: 2007
- Investment segments: SSIAM provides diversified fund management and portfolio management services
to domestic and foreign individual and institutional investors. The company currently has 3 ETFs listed on the market: SSIAM VN30, SSIAM VNFIN LEAD and SSIAM VNX50 ETF
3.1.4. Mirae Asset Fund Management Company Limited (Vietnam)
Mirae Asset Fund Management (Vietnam) Co., Ltd. is 100% owned by Mirae Asset Global Investment Co., Ltd., a pioneer in the Korean financial services industry. Preliminary information about Mirae Asset VN is as follows:
- Total assets: More than 76 billion (According to financial report of the 4th quarter of 2021 )
- Year of establishment: 2018
- Investment segments: Securities investment fund management, securities investment portfolio management and securities investment consulting. The company currently has open-end funds MAGEF, MAFF and ETF MAFM VN30
So, according to the above brief information, I will arrange the scale and reputation of fund management companies in the following order:
Dragon Capital > VinaCapital > SSIAM > Mirae Asset .
3.2. Criterion 2: liquidity
Liquidity is the ability to buy, sell, and trade a fund.
It is easy to see that Dragon Capital’s 2 ETFs have very impressive liquidity, with an average of about 1 million CCQs traded per day. Looking at the transaction statistics on the websites of these companies, I rank them in the following order:
VFMVN30 > VFMVN DIAMOND > SSIAM VNFIN LEAD > MAFM VN30 > VinaCapital VN100 > SSIAM VNX50 ETF > SSIAM VN30
3.3. Criterion 3: Diversification
To ensure safety, we should choose funds that follow the indexes as closely as possible. In this spirit, we arrange them in the following order:
VinaCapital VN100 > SSIAM VNX50 ETF > VFMVN30, SSIAM VN30, MAFM VN30 > VFMVN DIAMOND > SSIAM VNFIN LEAD
3.4. Criterion 4: ability to adhere to indicators (performance)
In general, ETFs track quite closely to the index that each fund needs to track (specifically, you can go to each fund’s website to see more charts, but in general, they are similar, not much different). In my personal ranking, it is as follows:
VFMVN30, SSIAM VN30, MAFM VN30, VFMVN DIAMOND > VinaCapital VN100 > SSIAM VNX50 ETF > SSIAM VNFIN LEAD
3.5. Criterion 5: Management fee
All 7 ETFs have quite low management fees (around 0.6 – 0.8% is suitable) but I also include them here for easy comparison:
SSIAM VN30 (0.55%) > MAFM VN30 (0.6%) > VFMVN30, SSIAM VNFIN LEAD, SSIAM VNX50 ETF (0.65%) > VinaCapital VN100 (0.67%) > VFMVN DIAMOND (0.8%)
3.6. Summary
So, I have briefly reviewed some criteria for choosing ETFs. Personally, I am investing in the 3 ETFs below. You can refer to the websites of the companies managing these funds to understand better.
Figure 3: ETFs that I am investing in (red frame)
Thank you for reading my sharing, hopefully it has brought more or less useful value to you.
- Sky -