Investment fund volatility during the Covid-19 crisis in Vietnam

Abstract

Investment funds take an indispensable role in the capital market of any economy over the globe since they provide major sources of financing and investment for various market participants, and contribute to the stability for the market. However, the unprecedented Covid-19 has catastrophically hit the entire world including Vietnam’s financial market and the fund industry, specifically causing drastic plunge in value of fund holdings and investors to flee out of investment funds, magnifying
the volatility and shrinking the market stabilizing role of investment funds. Therefore, examining the investment fund volatility during the covid-19 crisis in Vietnam could benefit investors, investment funds, and market regulators in drawing solutions and better preparation in enhancing the resilience of investment funds as well as Vietnam’s financial market for future unpredictable events. This paper, by utilizing descriptive statistical tools combined with the aggregating method, finds that Exchange Traded Funds (ETFs) have proven their resilience better than open-end funds, especially under market stressed circumstances, and the effect of the Covid-19 on those funds seems to be smoothed out for later comebacks. Then, to improve the presence and sustainable development of the investment fund industry in Vietnam, few valuable recommendations have been withdrawn.