An employee prepares to hand over the Vietnamese bank notes to a customer at a transaction office of Vietinbank in Hanoi. (Photo: VNA)The confidence of investors is at such a low level that many are willing tosell corporate bonds at any cost to collect money at a high discount.
According to cafef.vn, most bondsare trading below par value by 4-5%, and with an addition of a 10-12% yield, itmeans sellers accept a 14-17% discount. Investors are even willing to sell fundcertificates.
The sudden, large-scale withdrawal from funds has also caused the net assetvalue (NAV) of open-ended bond funds to decline deeply. According to estimatesat ten large bond funds, the total NAV is now only about 13.5 trillion VND, thelowest in recent years and down 6.2 trillion VND compared to the end of October.The figure even dipped by 12.3 trillion VND compared to the beginning of thisyear.
In the previous two years, 2020 and 2021, open-ended bond funds attracted alarge number of investors because of their flexible investment mechanism, whichwas suitable for those with small investments. At the peak of this period,which was from June to October 2021, the total NAV of the ten large open-endedbond funds regularly stayed around the threshold of 28-30 trillion VND.However, movements from the beginning of the year reversed that trend.
The NAV of open-ended bond funds began to plunge after the scandal of Tan HoangMinh and only recovered slightly between May and September. The trend suddenlyreversed in October, causing the total NAV of the funds to plummet below 19.7trillion VND at the end of last month.
The fall was mainly driven by the strong net withdrawal of investors while themobilised value was very low, with many open-ended funds barely able to raisenew money during the period.
Most open-ended bond funds’ size has shrunk since early November, but tovarying degrees. TCBF still leads in terms of size, with a NAV of about 10.7trillion VND, but it has fallen sharply from more than 16 trillion VND at the endof last month.
Compared to the peak recorded at the end of June 2021, the size of TCBFhas decreased by about 16 trillion VND, equivalent to 60%. MBBond and SSIBFalso saw significant slides in size, down 39% and 22%, respectively, comparedto the end of October.
Moreover, the race to increase savings interest rates also affected theactivities of open-ended bond funds. Although savings interest rates are not asattractive as those of bond fund certificates, bank deposits are stillbasically a safer channel, especially amid the many unpredictable fluctuationsin the market.
However, it should be noted that bond funds have professional investment teamsand hold the bonds of leading enterprises in many fields. The investmentactivities of these funds are also diversified, with risk assessment andmanagement complying with professional standards.
Therefore, investors should not panic and carefully consider the quality of thebond portfolio held by the investment funds before making a decision, avoidingwithdrawal at all costs to protect their own interests./.
VNA
