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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 economy grew by 2.9% in 2020, one of just a few economies to expand amid the COVID-19 pandemic. The World Bank forecasts that the country’s economy will grow by 4.8% in 2021. Due to the ongoing negative impact of the COVID-19 pandemic, the current forecast is two percentage-points lower than the projection the World Bank made in December of 2020. One way investors can gain exposure to Vietnam’s economy is by investing in a Vietnam-focused exchange-traded fund (ETF), which 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).
Key Takeaways
- Vietnamese equities outperformed the broader U.S. market over the past year.
- The best (and only) Vietnam ETF is VNM.
- Its top three holdings are Masan Group Corp., Vietnam Dairy Products 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 46.4% over the past 12 months compared to the S&P 500’s total return of 31.1%, as of Aug. 30, 2021. The best-performing (and only) Vietnam ETF is the VanEck Vectors Vietnam ETF (VNM). We take a closer look at this fund below. All numbers below are from ETFdb.com as of Aug. 31, 2021.
- Performance over 1-Year: 34.9%
- Expense Ratio: 0.66%
- Annual Dividend Yield: 0.36%
- 3-Month Average Daily Volume: 238,491
- Assets Under Management: $544.6 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 which generate at least 50% of their revenue from Vietnam. More than two thirds 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 and financials. 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 Vectors Vietnam ETF (VNM) Top 10 Holdings | ||
|---|---|---|
| Company Name (Ticker) | Percent of VNM Assets | Description of Company |
| Masan Group Corp. (MSN:STC) | 8.4% | Food and beverage processor |
| Vietnam Dairy Products Corp. (VNM:STC) | 8.0% | Dairy product manufacturer and distributor |
| Vingroup Joint Stock Company (VIC:STC) | 7.3% | Conglomerate with a focus on real estate development |
| Vinhomes JSC (VHM:STC) | 7.2% | Real estate developer |
| No Va Land Investment Group Corp. (NVL:STC) | 6.0% | Real estate investment firm |
| Hoa Phat Group JSC (HPG:STC) | 5.3% | Steel products manufacturer |
| Joint Stock Commercial Bank for Foreign Trade of Vietnam (VCB:STC) | 4.9% | Commercial bank |
| SSI Securities Corp. (SSI:STC) | 4.2% | Brokerage, trading, and financial advisory services |
| Feng Tay Enterprise Co. Ltd. (9910:TAI) | 4.0% | Manufacturer of athletic footwear |
| Mani Inc. (7730:TKS) | 4.0% | Manufacturer of medical goods and equipment |
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 to 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 on 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.
