NAV stands for “Net Asset Value” which represents the value of an investment fund’s assets minus its liabilities at a given time. It is calculated by subtracting the fund’s total liabilities from the total value of its assets (including cash, securities, and other assets) and then dividing the result by the number of fund units currently outstanding. This gives the NAV per unit, which indicates the value of each fund unit.
The formula for calculating NAV per unit is:
VinaCapital open-ended funds update and publish NAV on their web pages after each trading day.
NAV helps you:
- Determine how many fund units you can purchase with a specific investment amount. For instance, if you invest VND 100 million and the NAV per unit is VND 20,000, you will receive 5,000 fund units.
- Calculate the amount you will receive if you decide to withdraw funds from the open-ended fund.
A benchmark index is a standard used by an open-ended fund to compare and assess its performance. The benchmark is typically chosen to closely reflect the fund’s investment strategy.
| VinaCapital open-ended funds | Benchmark indices |
VINACAPITAL -VEOF | VN-Index |
VINACAPITAL-VIBF | Average of VN-Index and the 12-month deposit rate of Vietcombank |
VINACAPITAL-VFF | Average of 12-month deposit rates with interest paid at maturity from four state-owned commercial banks (Vietcombank, BIDV, VietinBank, and Agribank) |
When evaluating the performance of an open-ended fund, you should compare the fund’s return to its benchmark index. A well-managed fund should have a higher return than its benchmark index.
Use the following formula to calculate your return:
If % Return > 0, you are making a profit.
If % Return = 0, the investment is breakeven.
If % Return < 0, you are experiencing a loss.
Current price and purchase price can be easily checked on VinaCapital MiO app.
If you have invested at different times, the simplest way is to calculate total profit using the formula:
If % Return > 0, you are making a profit.
If % Return = 0, the investment is breakeven.
If % Return < 0, you are experiencing a loss.
- Redemption fees: Calculated as a percentage of the redemption value and typically decrease over time. Lowest fees may range from 0% to 0.5%.
- Personal income tax: 0.1% according to Vietnamese law.
- Transfer fees: Charged by the fund’s custodian bank and based on the custodian bank’s fee schedule.
To evaluate the effectiveness of your investment, compare it with the fund’s benchmark index, such as the VN-Index for equity funds. Apply the formula to calculate the % return of the VN-Index over the same period. If the % loss of your investment is significantly lower than the % decline of the VN-Index, your investment might still be effective. Market downturns can present opportunities to invest more to potentially achieve higher returns when the market recovers and fund unit prices increase.
- Purchase fee (or Subscription fee): The fee paid when buying fund units.
- Redemption fee (or Exit fee): The fee paid when selling fund units.
- Management fee:
- Switching fee: Charged when converting fund units from one fund to another within the same management company.
- Personal income tax (PIT) on the sale of fund certificates is the tax that investors must pay to the government when they earn income from selling fund units.
Fee structure for VinaCapital open-ended funds
When investing in an open-ended fund, you should be aware of the following fees and taxes:
1. Purchase fee (or Subscription fee): The fee paid when buying fund units.
- VinaCapital open-ended funds have no purchase fees.
- The purchase fee is used to cover the costs of issuing fund units, and the expenses related to distributing these units to investors.
- Purchase fees generally range from 0% to 5% of the purchase value, depending on the type of fund and management company.
2. Redemption fee (or Exit fee): The fee paid when selling fund units.
- The redemption fee is applied to help the fund maintain stability in asset management.
- Redemption fees typically range from 0% to 2% of the redemption value and decrease over the fund units’ holding time.
3. Management fee:
- Investors do not pay this fee directly as it is deducted automatically from the fund’s asset value.
- The management fee covers costs related to portfolio management, market research, administrative, accounting, legal, and other operational expenses.
- The fee typically ranges from 0.5% to 2% of the fund’s net asset value (NAV) per year.
4. Switching fee: Charged when converting fund units from one fund to another within the same management company.
- VinaCapital open-ended funds have no conversion fees.
- The conversion fee is applied to cover administrative costs.
- Switching fees generally range from 0% to 3% of the converted amount.
- Switching fund units can be a useful tool for investors who want to adjust their investment strategy without having to withdraw and reinvest in another fund, saving time and effort.
5. Personal income tax (PIT) on the sale of fund certificates is the tax that investors must pay to the government when they earn income from selling fund units.
- PIT: 0.1% on the sale of fund units.
- The fund management company will withhold PIT before paying the sale proceeds to the investor.
Note: Decisions should not be based solely on the fee structure, as a well-performing fund can still offer good returns even after fees. For example:
Fund A has no redemption fee but only achieved a 6% return over one year.
Fund B has a 2% redemption fee but achieved a 15% return over one year.
An investor in Fund B, after selling their fund units, would still realize a profit of 12.7% (15% – (15% × 2%)), compared to an investor in Fund A who would have a return of 6.7% (12.7% – 6%).
