Vietnam has undergone dramatic shifts in recent decades, as the country evolves from a command economy to a market economy. Today, many investors are looking toward emerging markets such as Vietnam as an area of potential investment, particularly as Vietnamese exports begin to make up a larger share of global trade.
One way to gain access to the Vietnamese economy is by investing in a Vietnam-focused exchange-traded fund (ETF), which can offer increased diversification, helping to protect against risk. Readers should note, however, that Vietnam is very different from most other regions covered by ETFs, in which investors can often choose from a large number of potential funds. This is not the case with Vietnam. For the time being, the best (and only) Vietnam-focused ETF is the VanEck Vectors Vietnam ETF (VNM).
Even though there is currently only one option, investors should nevertheless review the main holdings of this ETF in order to determine whether they fall within their desired parameters. To be sure, the ETF’s negative return over the past year suggests that investors may need to be patient going forward. All figures below are as of May 12th, 2020.
- Performance over 1 year: -18.7%
- Expense Ratio: 0.68%
- Annual Dividend Yield: 0.92%
- 3-Month Average Daily Volume: 338,543
- Assets Under Management: $316.2 million
- Inception Date: August 11, 2009
- Issuing Company: VanEck
While there are other emerging markets ETFs that include small holdings of Vietnamese equities, VNM is the closest thing to a pure play Vietnam ETF that U.S. investors are likely to find. This fund tracks the performance of the MVIS Vietnam Index, a modified market cap-weighted index tracking both Vietnamese companies and also non-local firms generating more than half of their revenue in Vietnam. While this means that the index, as well as VNM, does not include exclusively Vietnamese names, it nonetheless represents a broad selection of companies with deep exposure to the nation's economy. Below, we'll take a look at the fund’s 10 largest holdings.
|Top VNM Holdings|
|Company Name (Ticker)||Percent of VNM Assets||Description of Company|
|Vingroup JSC (VIC:HSX)||7.8%||Conglomerate with a focus on real estate development|
|Vinhomes JSC (VHM:HSX)||7.46%||Real estate developer|
|Vietnam Dairy Products JSC (VNM:HSX)||7.25%||Dairy product manufacturer and distributor|
|Joint Stock Commercial Bank for Foreign Trade of Viet Nam (VCB:HSX)||6.1%||Commercial bank|
|No Va Land Investment Group Corp. (NVL:HSX)||5.93%||Real estate investment|
|Masan Group Corp (MSN:HSX)||5.41%||Food and beverage products|
|Mani Inc. (7730:TYO)||5.24%||Medical equipment manufacturer|
|Vincom Retail JSC (VRE:HSX)||5.22%||Commercial retail-focused real estate investment and operations|
|VietJet Aviation JSC (VJC:HSX)||4.56%||Budget airline|
|Hoa Phat Group JSC (HPG:HSX)||4.41%||Steel products manufacturer|