WHAT ARE THE BEST VIETNAM FUNDS TO INVEST IN? (OPEN ENDED) PT 1

When my last blog post covered investing in CEFs to get exposure to the Vietnam stock market, I discussed how the potential to buy assets at a discount to NAV was an advantage. This however assumes one does not panic and sell at a bigger discount! Some investors may prefer an investment that more readily allows you to redeem your holdings in line with NAV. In that respect, the open-ended managed funds that invest in the Vietnam stock market might be more suitable, so let’s take a look at some of them. This will be part one of two blog posts examining some of the choices in this space.

Investing in Vietnam open ended managed funds

In a previous blog post I briefly mentioned 9 open ended Vietnam managed funds one could look at to get exposure to the Vietnam stock market. If you want to learn more about whether to choose an ETF vs CEF or open ended fund, don’t forget to checkout that blog post here first, HOW TO INVEST IN THE VIETNAM STOCK MARKET. ETF, CEF, FUND? – VIETNAM STOCK MARKET (vietnamesestockmarket.com). Here now I will take a look at a snapshot of four of them, I will follow up with those other five in the next blog post. The four I shall cover here are below:

List of Vietnam open ended managed funds

  • Dragon Capital Vietnam Equity (UCITS) Fund
  • VCG Partners Forum One Vietnam (UCITS) Fund, managed by VinaCapital.
  • PYN Elite Fund, managed by PYN Fund management.
  • JP Morgan Vietnam Opportunities Fund

I will now take a bit of a closer look at these options.

Dragon Capital Vietnam Equity Fund Review / Brief Summary

Dragon Capital Vietnam Equity Fund Objective – VEF is designed to provide investors with broad exposure to Vietnam’s public equity markets and seeks medium to long term capital appreciation through investing primarily in securities issued by Vietnamese companies that are traded on the Ho Chi Minh Stock Exchange, the Hanoi Stock Exchange, the Unlisted Public Company Market (UPCoM) or another recognised market, although up to 10% of the Net Asset Value of the Fund may comprise securities that are traded over the counter or are unlisted. VEF is managed in reference to FTSE VN Index.

Dragon Capital Vietnam Equity Fund Size – $US 194 million

Dragon Capital Vietnam Equity Fund Fees – 2% with TER capped at 2.5%

Dragon Capital Vietnam Equity Fund Top holdings

Dragon Capital Vietnam Equity Fund Performance

Source: Dragon Capital Fund Performance Report Vietnam Equity (UCITS) Fund VEF to July 8 release July 15, 2021

VCG Partners Vietnam Fund Review / Brief Summary

VCG Partners Vietnam Fund Objective – VVF is an actively managed UCITS-compliant fund that invests in equities and equity-related securities of companies that are based in Vietnam, with an objective to deliver long-term capital growth, through bottom-up stock picking and disciplined risk management.

VCG Partners Vietnam Fund Size – $US 57 million

VCG Partners Vietnam Fund Fees – Various different classes of units with various base management fee structures ranging from 1.25% up to 2%, and some also have performance fee of 15% of alpha over hurdle rate so one needs to check the specific details. Subscription fees also may apply to various classes.

VCG Partners Vietnam Fund Top holdings

Performance

Source: VCG Partners Vietnam Fund Monthly Factsheet June 30, 2021.

PYN Elite Fund Review / Brief Summary

PYN Elite Fund Objective – PYN Elite is an actively managed equity fund that has successfully invested in the Asian stock markets for over 22 years. Currently, the fund’s assets are in the Vietnamese stock market in about 30 listed companies.

Our goal is to find significant value gains with considerable company and market-specific weightings. The fund aims at long-term value investing and aims to have a clearly higher return than the equity funds with diversified global portfolios.

PYN Elite fund (non-UCITS) is suitable for demanding investors in the financial markets. The investor investing in the fund must be seeking a high risk-bearing return on his/her investment for at least five years.

PYN Elite Fund Size – $US 861 million.

PYN Elite Fund Fees – Base fee is 1% with 12% performance fee subject to high watermark.

PYN Elite Fund Top holdings

PYN Elite Fund Performance

Source: PYN Elite Fund Presentation July 2021

JP Morgan Vietnam Opportunities Fund Review / Brief Summary

JP Morgan Vietnam Opportunities Fund Objective – To provide investors with long-term capital growth by investing primarily (i.e. at least 70% of its total net asset value) in equity securities of companies either (i) domiciled or listed on a stock exchange in Vietnam, or (ii) with actual or prospective operations, assets or investments, direct or indirect, in Vietnam in an aggregate amount of not less than either US$50 million or 10 per cent. of the gross assets of the investing company (albeit such operations, assets or investments may at the time of investment be immaterial to the financial results of such company)

JP Morgan Vietnam Opportunities Fund Size – $US 412 million

JP Morgan Vietnam Opportunities Fund Fees – Base fee is 1.5% per annum. Subscription fee of up to 5% may apply.

JP Morgan Vietnam Opportunities Fund Top holdings

JP Morgan Vietnam Opportunities Fund Performance

Source: JP Morgan Vietnam Opportunities Fund Factsheet May 31, 2021.

SHOULD I INVEST IN VIETNAM AND HOW BEST TO INVEST IN THEIR STOCK MARKET?

Conclusion of the best Vietnam funds to invest in

In regard to the open-end funds offered by the likes of Dragon Capital / VinaCapital (first 2 mentioned above), my bias is to stick to their offerings of their closed end fund structures (CEFs). I find the CEF versions not only usually trade at reasonable attractive discounts, but it is simpler to get comfort surrounding fee structures, performance and being listed on the LSE. Whereas digging deeper into the various class structures of the open-end versions is not just time consuming, but gives you nagging doubts you are missing something. Some of the prospectuses are quite long!

The PYN Elite Fund is a very interesting story and differs a lot to the 2 funds I just mentioned. Petri Deryng is the portfolio manager and been so since 1999. Since then, they are focused on Asian stock markets however their history is not being only dedicated to Vietnam. They will make a conviction call to a country’s stock market in focus on that when they think it warrants it. In the case of Vietnam, they made the good call in 2012 to start shifting their fund there. They are still bullish on Vietnam stocks as you can see from their top 10 and therefore currently likely to be Vietnam focused for many years from now. It arguably has more key man risks than the first two larger funds management businesses I discussed. Maybe though the fact the PM here could pivot one day out of Vietnam stocks into a more attractive market a long time from now could be an advantage.

The JP Morgan Vietnam Opportunities Fund would at this stage probably need to convince me more with performance data. The chart I observed looked that over the last ten years, they have just gained an edge over the benchmark in the last year or so. The launch date of the product is listed as November 2006, no benchmark was listed for the fund from then so that is why a benchmark return is not disclosed longer term. They also avoid presenting annualised performance numbers since inception.

I hope in the next blog post to cover some of the other open ended Vietnam funds I came across on my searches.

Is Vietnam a good investment?

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