This is a follow up to part 1 of my last blog post, where I had a brief look at some of the choices available when it comes to choosing the best Vietnam funds to invest in (open end structure). The five funds I explore here are generally smaller funds management operations compared with a couple of the bigger players I mentioned last time such as Dragon Capital and VinaCapital.
Investing in Vietnam open ended managed funds
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 the other 5 of a list of 9 open ended Vietnam managed funds that I had come across in my searches.
List of Vietnam open ended managed funds
Here I will take a look at the other five Vietnam funds to invest in (open ended).
- AFC Vietnam Fund, managed by Asia Frontier Capital.
- Amundi Vietnam Opportunities Fund
- Lion Global Vietnam Fund
- TCM Vietnam High Dividend Fund, managed by Trustus Capital Management.
- TIM Vietnam Actively Managed Certificate, managed by Turicum Investment Management.
I will now take a bit of a closer look at these options.
AFC Vietnam Fund Review / Brief Summary
AFC Vietnam Fund Objective – Achieve long-term capital appreciation by investing in a diversified portfolio of listed Vietnamese companies as well as those that relate to non-Vietnamese companies with primary business operations in Vietnam. The fund currently has a focus on small to medium cap equities which are considered under-priced.
AFC Vietnam Fund Size – $US 63 million
AFC Vietnam Fund Fees – 1.8% base management fee with performance fee 12.5% of NAV appreciation with high watermark.
AFC Vietnam Fund Top holdings –
AFC Vietnam Fund Performance –
Source: AFC Vietnam Fund Factsheet June 30, 2021
Amundi Vietnam Opportunities Fund Review / Brief Summary
Amundi Vietnam Opportunities Fund Objective – To provide investors with long-term capital growth by investing directly or indirectly in a diversified portfolio of securities including equities, debt securities of issuers with actual or prospective business operations in Vietnam and provide economic exposure to the Vietnam market. The fund intends to invest mainly in Vietnam listed companies with existing operations, assets or investments in Vietnam. The fund may also invest in other Vietnam related companies such as:
• Companies that have publicly announced or made public their plans to expand existing and/or acquire similar or complimentary operations in Vietnam, with earnings enhancement potentials.
• Companies that have entered and/or announced to enter into joint venture projects with local Vietnamese companies, with minimum 25% stake in the joint venture company.
Amundi Vietnam Opportunities Fund Fees – 1.8 to 2.5% base management fee with performance fee 15% of NAV appreciation with high watermark. Subscription fee up to 5% may apply.
Amundi Vietnam Opportunities Fund Performance –
Source: Amundi Vietnam Opportunities Fund Factsheet April 30, 2021.
Lion Global Vietnam Fund Review / Brief Summary
Lion Global Vietnam Fund Objective – The Fund aims to achieve medium to long-term capital appreciation by investing in Vietnam. The Fund will invest in companies listed in Vietnam and/or other companies listed elsewhere that have operations in or derive part of their revenue from Vietnam and the Indo-China Region. The Fund may also invest in short-term fixed income instruments listed or traded on recognised markets within the Indo-China region.
Lion Global Vietnam Fund Size – $US 113 million.
Lion Global Vietnam Fund Fees – 1.5 to 2% base management fee with performance fee 15% of NAV appreciation with high watermark. Subscription fee up to 5% may apply.
Lion Global Vietnam Fund Top holdings –
Lion Global Vietnam Fund Performance –
Source: Lion Global Vietnam Fund Factsheet May 31, 2021
TCM Vietnam High Dividend Fund Review / Brief Summary
TCM Vietnam High Dividend Fund Objective – At least half of the fund capital will be invested in listed shares on the exchanges of Ho Chi Minh City and Hanoi. At the most 20% of the fund can be invested in the Vietnamese OTC market. This depends on the liquidity of this market. TCM Vietnam investment policy will be aimed at achieving capital growth as well as dividend pay outs. The risk profile is high, due to investments being channelled into frontier markets in Vietnam. The relationship between global financial markets and the Vietnamese markets is low, because the latter are less sensitive to international developments. To achieve its objective, the Fund invests 95% to 100% of its total assets through TCM Investment Funds Luxembourg in units of TCM Vietnam High Dividend Equity (Lux). The Fund qualifies as feeder-structure.
TCM Vietnam High Dividend Fund Fees – Base fee is 1.5% per annum. Performance fee 10%.
TCM Vietnam High Dividend Fund Top holdings –
TCM Vietnam High Dividend Fund Performance –
Source: TCM Vietnam High Dividend Fund Factsheet June 30, 2021.
TIM Vietnam Actively Managed Certificate Review / Brief Summary
TIM Vietnam Actively Managed Certificate Objective – Add value for risk-conscious long-term investors to benefit from future growth in emerging Vietnam, which stands at the beginning of industrialization. Our investment approach is based on fundamental analysis of the underlying business and fair price valuation, a leadership position in the local market, strong corporate governance, and above average earnings growth prospects compared to its local peers. For market timing purposes, we apply a Technical Trend Following system as a layer to our fundamental analysis.
TIM Vietnam Actively Managed Certificate Fees – 1 to 1.5% base management fee with performance fee 10% with high watermark.
TIM Vietnam Actively Managed Certificate Top holdings –
TIM Vietnam Actively Managed Certificate Performance –
Source: TIM Vietnam Actively Managed Certificate Factsheet April 30, 2021.
SHOULD I INVEST IN VIETNAM AND HOW BEST TO INVEST IN THEIR STOCK MARKET?
Conclusion of what are the best Vietnam funds to invest in
As I mentioned earlier, some of these funds are very small compared to some of the bigger players I discussed in my last blog post like Dragon Capital & VinaCapital. The issues that may present are the lack of scalability benefits in terms of cost structures for the manager. For instance you might more likely find them with subscription fees, higher fees overall, and hidden charges. There is also a possibility if the products don’t get traction that they close down one day and have to liquidate during depressing market conditions.
I find the level of transparency provided via searching for fund factsheets less than ideal in terms of issues I just mentioned. That is, clear guidance on subscription fees, “other” fees, how exactly the performance fee is calculated, the size of the fund is not always as easy as it should be to track down. In my experience this can be a red flag, as is when performance data provided does not match clearly the inception date.
My blog post here was aimed at providing brief snapshots for further investigation, part of which would involve chasing up information on these matters where necessary.
For what it is worth I get a little bit of comfort from AFC Vietnam Fund on these types of matters. Interestingly they have also launched dedicated funds that focus on Iraq and Uzbekistan, the latter has been booming in the last year.
The low size of a fund is not all negative of course, in fact it can be quite positive for getting set in smaller “under the radar” opportunities. This AFC Vietnam Fund from a quantitative value point of view could have more potential upside compared with some of the very large institutional players in the Vietnam stock market. For full disclosure I don’t have any investments in this fund or relationships with them at the time of writing.
As discussed in recent blog posts, I am a shareholder in the VinaCapital Vietnam Opportunity Fund. To read more about my experiment tracking the performance of that and other Vietnam related exposures in my portfolio, check out the following link:
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