Abstract
Purpose The purpose of this paper is to examine the determinants of mutual funds’ performance at both a country level and a fund level in Vietnam. Design/methodology/approach The different types of funds with more than three-year operation are selected to remove outliers of the stock market boom from 2015 to 2018. The data set includes 54 mutual funds operating during the period from 2008 until November 2018. Findings The research finds that there is a positive relationship between macroeconomics and mutual funds’ performance. Furthermore, country-level governance such as regulation effectiveness, political stability, economic growth and financial development has a positive correlation with mutual funds’ performance. However, the impact of fund-level factors is diverse with the no significant impact of board size on mutual fund’s performance, while passive funds perform better than active funds in Vietnam. Practical implications The research results suggest that investors should pay attention to the types of funds and operating expense when making an investment decision in mutual funds. There are some recommendations for both government policy-makers and the mutual fund industry that are likely to facilitate the development of this field in Vietnam. Originality/value The research contributes to the understanding of what are the factors that should be considered when investing in mutual funds.
Highlights
The growth of mutual funds has been considerable in recent years, which has been influenced by the financial market integration around the world
Using a sample of 54 mutual funds in Vietnam from 2008 to November 2018, this study investigates the determinants of mutual fund performance such as country-level and fund-level factors
The effects of fund-level factors play an essential role in explaining mutual fund performance
Summary
The growth of mutual funds has been considerable in recent years, which has been influenced by the financial market integration around the world. The trade volume of mutual funds around the world contributes significantly to economic development and provides financial liquidity and profit for investors (Champagne et al, 2018). Mutual funds in Vietnam have increased significantly in size and trading value since the first investment fund in 1991, to more than 130 funds in 2018. It is inevitable that the mutual fund industry around the world will face several disadvantages due to global economy uncertainty such as the trade war between the USA and China, which will have remarkably negative impact on global economic development in general, and Vietnamese mutual funds in particular (Champagne et al, 2018; Ercolani et al, 2018; Parida and Teo, 2018). It is inevitable that the mutual fund industry around the world will face several disadvantages due to global economy uncertainty such as the trade war between the USA and China, which will have remarkably negative impact on global economic development in general, and Vietnamese mutual funds in particular (Champagne et al, 2018; Ercolani et al, 2018; Parida and Teo, 2018). Otero and Reboredo (2018) emphasized that the Vietnamese trade balance will reduce by 20 percent because Chinese products contribute more than 60 percent of the trade volume in Vietnam, which will lead to a financial crisis if the Government does not make appropriate adjustments
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