Factors Affecting Mutual Fund Performance: Evidence From Open-Ended Funds In Vietnam

Abstract

The remarkable expansion of mutual funds in the 1990s led to its widespread adoption as an investment option among diverse global investors. In particular, in Vietnam's financial market, mutual funds were quickly established in the 2000s and have grown tremendously to the present. In addition, open-ended and closed-end funds are also available in Vietnam, but with the indefinite operation of an open-ended fund instead of only operating for a certain time like a closed-end fund. Moreover, mutual funds also receive enthusiastic support from the government. This makes open-end funds more popular in Vietnam's financial market and has stronger growth potential in the future. With high potential, it is extremely important for investors to evaluate the performance of an open-ended fund. This makes it more attractive for determining performance as well as understanding the factors that affect the overall performance of open-end funds. This is also the main objective drives the research paper on open-end funds in Vietnam market. The study evaluates the performance of open-ended funds through the Treynor ratio (1965) and explained the factors affecting that performance including the proficiency of fund managers (stock selection skill with market timing skill), size of fund and variable of macroeconomics (inflation and exchange rate). To obtain the most objective results, panel data will be used through secondary data of 14 open-ended funds operating in the period 2015 - 2022 and will employ the most appropriate regression model. The results attained describe whether the performance of open-end funds is affected by several factors in the Vietnamese market. Stock selection skills, inflation and exchange rates have shown an effect on the performance of open-end funds. However, other factors including market timing skills and fund size did not show any effect on performance.