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 economy grew by 2.9% in 2020, one of just a few economies to expand amid the COVID-19 pandemic. Due to the ongoing negative impact of the COVID-19 pandemic, Vietnam’s gross domestic product (GDP) declined by 6.2% in the third quarter (Q3) of 2021. The government has been targeting 6.5% growth for all of 2021, but a minister said in September 2021 that GDP growth could come in closer to 3.5% to 4%.
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 risk. Some of the largest companies in Vietnam include Hoa Phat Group JSC (HPG) and No Va Land Investment Group Corp. (NVL).
- 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 Vingroup Joint Stock Co., Vinhomes JSC, and Masan Group Corp.
There is only one distinct ETF trading in the United States 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 28.8% over the past 12 months, compared with the S&P 500’s total return of 25.6%, as of Dec. 3, 2021. 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 Dec. 2, 2021.
- Performance Over One-Year: 27.3%
- Expense Ratio: 0.61%
- Annual Dividend Yield: 0.34%
- Three-Month Average Daily Volume: 205,495
- Assets Under Management: $584.6 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 China are also represented.
Real estate has the largest sector weighting in the fund, followed by consumer staples, financials, consumer discretionary, 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|
|Vingroup Joint Stock Co. (VIC:STC)||8.7%||Conglomerate with a focus on real estate development|
|Vinhomes JSC (VHM:STC)||7.5%||Real estate developer|
|Masan Group Corp. (MSN:STC)||7.2%||Food and beverage processor|
|Vietnam Dairy Products Corp. (VNM:STC)||6.8%||Dairy product manufacturer and distributor|
|No Va Land Investment Group Corp. (NVL:STC)||5.7%||Real estate investment firm|
|Hoa Phat Group JSC (HPG:STC)||5.4%||Steel products manufacturer|
|Thaiholdings JSC (THD:HSTC)||4.9%||Real estate leasing and construction company|
|Eclat Textile Co. Ltd. (1476:TAI)||4.4%||Fabric and garment production|
|Joint Stock Commercial Bank for Foreign Trade of Vietnam (VCB:STC)||4.4%||Commercial bank|
|Feng Tay Enterprise Co. Ltd. (9910:TAI)||4.0%||Manufacturer of athletic footwear|
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