Mutual funds get back losses and more as stock market rebounds

Mutual funds get back losses and more as stock market rebounds

Open-ended equity funds benefited from the strong recovery in the benchmark VN-Index in August, with some posting monthly gains of more than 10 per cent, according to data from fund distribution platform Fmarket.

Many open-ended equity mutual funds posted gains of more than 10 per cent in one month. — Photo courtesy of Fmarket

Open-ended equity funds benefited from the strong recovery in the benchmark VN-Index in August, with some posting monthly gains of more than 10 per cent, according to data from fund distribution platform Fmarket.

The VN-Index rose 5.6 per cent in August, driven mainly by large-cap stocks, lifting the performance of many open-ended equity funds.

As of August 28, VINACAPITAL-VEOF led with a monthly return of 13.41 per cent, followed by VLGF at 13.09 per cent.

ABEF, VCBF-BCF, VINACAPITAL-VESAF, VCBF-MGF, KDEF, VINACAPITAL-VMEEF, MAFEQI, and UVEEF saw gains ranging from 10.18 per cent to 12.92 per cent.

The top performers generally had high equity allocations, with sizeable exposure to large-cap companies and sectors that led the recovery.

Their July portfolios included substantial holdings in MBB, CTG, VCB, STB, and HDB, and blue chips such as HPG and MWG.

However, one-month returns reflect short-term market movements.

Over the three-year period from August 28, 2023, to August 28, 2026, BVFED and MAGEF recorded cumulative returns of 57.22 per cent and 52.18 per cent.

The leading open-ended equity funds posted gains of 41-50.85 per cent.

The market recovery has coincided with stronger corporate earnings.

As of August 28, 1,134 of 1,522 listed companies, representing 99.6 per cent of total market capitalisation, had reported their business results.

Aggregate revenues rose by about 36.5 per cent and net profits by more than 50 per cent.

Despite the strong earnings growth, market valuations remain relatively low.

The VN-Index was trading at a P/E ratio of about 12.5 times, or 10.6 times excluding Vingroup-related stocks.

This valuation level means there is room for further gains in a number of fundamentally sound companies, including some held by investment funds.

The relatively low market valuation is also reflected in open-ended fund portfolios.

Đinh Đức Minh, senior investment director at VinaCapital, said the market is not facing any specific negative news or clearly identifiable shock, and the main issues are weak investor sentiment and higher interest rates.

Many fundamentally sound companies have nevertheless seen their prices fall sharply as overall market confidence weakened, he said.

Looking ahead, the recovery in corporate earnings and Việt Nam's potential upgrade to emerging market status are expected to support foreign capital inflows, he said.

Historical Fmarket data shows that leading funds like VINACAPITAL-VESAF, VINACAPITAL-VEOF, SSISCA, DCDS, and VCBF-BCF staged strong recoveries following market shocks, with gains ranging from 35 per cent to more than 99 per cent within a year of hitting their lows.

Minh said previous sharp corrections shared a common feature: valuations fell to very low levels before recovery cycles lasting about one to two years.

Gains from market bottoms were typically 80 to 100 per cent, he said.

Although the causes of each correction differed, the subsequent recovery pattern has been relatively consistent, he added. 

Bizhub