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Vietnam has undergone dramatic shifts in recent decades as the country evolves from a command economy to a market economy. Many investors have looked at emerging markets such as Vietnam as an area of potential investment.
Vietnam’s economic growth slowed to approximately 2.6% in 2021 after rising more than 2.9% in 2020, according to the country’s General Statistics Office (GSO). The GSO said that the COVID-19 pandemic seriously impacted every sector of the economy. Vietnam’s government is forecasting economic growth of 6-6.5% for 2022.
One way that investors can gain exposure to Vietnam’s economy is by investing in a Vietnam-focused exchange-traded fund (ETF). Doing so can offer increased diversification, helping to protect against idiosyncratic risk. Some of the largest companies in Vietnam include Hoa Phat Group JSC (HPG) and No Va Land Investment Group Corp. (NVL).
Key Takeaways
- Vietnamese equities outperformed the broader U.S. market over the past year.
- The best (and only) Vietnam exchange-traded fund (ETF) is VNM.
- Its top three holdings are Vinhomes JSC, Masan Group Corp., and Vingroup Joint Stock Co.
There is only one distinct ETF trading in the U.S. that is dedicated to the Vietnamese equity market. Vietnamese equities, as measured by the MSCI Vietnam Index, have outperformed the broader market with a total return of 17.4% over the past 12 months, compared with the S&P 500’s total return of 15.2%, as of Feb. 15, 2022. The best-performing (and only) Vietnam ETF is the VanEck Vietnam ETF (VNM). We take a closer look at this fund below. All numbers below are from ETF Database as of Feb. 15, 2022, except where indicated otherwise.
- Performance Over One-Year: 9.6%
- Expense Ratio: 0.61% (as of Feb. 16, 2022)
- Annual Dividend Yield: 0.34%
- Three-Month Average Daily Volume: 246,589
- Assets Under Management: $536.8 million
- Inception Date: Aug. 14, 2009
- Issuer: VanEck
While some emerging market ETFs own Vietnamese equities, VNM is the closest thing to a pure play. The fund tracks the MVIS Vietnam Index, which reflects the performance of the largest and most liquid companies that operate in Vietnam. VNM is a multi-cap ETF that invests in equities of various market capitalizations. Like its index, it includes companies that are both domiciled in Vietnam and elsewhere, but that generate at least 50% of their revenue from Vietnam. More than three-fourths of the fund’s holdings are of companies domiciled in Vietnam. Companies based in Taiwan, South Korea, Japan, and Malaysia are also represented. Real estate has the largest sector weighting in the fund, followed by consumer staples, consumer discretionary, financials, and industrials. VNM follows a blended strategy, investing in both growth and value stocks. Below, we’ll take a look at the fund’s 10 largest holdings.
| VanEck Vietnam ETF (VNM) Top 10 Holdings | ||
|---|---|---|
| Company Name (Ticker) | Percent of VNM Assets | Description of Company |
| Vinhomes JSC (VHM:STC) | 8.3% | Real estate developer |
| Masan Group Corp. (MSN:STC) | 7.5% | Food and beverage processor |
| Vingroup Joint Stock Co. (VIC:STC) | 6.6% | Conglomerate with a focus on real estate development |
| Vietnam Dairy Products Corp. (VNM:STC) | 6.6% | Dairy product manufacturer and distributor |
| Hoa Phat Group JSC (HPG:STC) | 6.1% | Steel products manufacturer |
| No Va Land Investment Group Corp. (NVL:STC) | 5.3% | Real estate investment firm |
| Feng Tay Enterprise Co. Ltd. (9910:TAI) | 4.7% | Manufacturer of athletic footwear |
| Eclat Textile Co. Ltd. (1476:TAI) | 4.5% | Fabric and garment production |
| Thaiholdings JSC (THD:HSTC) | 3.3% | Real estate leasing and construction company |
| SSI Securities Corp. (SSI:STC) | 3.1% | Investment management firm |
The comments, opinions, and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or adopt any investment strategy. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described in our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.
