WTF WITH THE LONG LIST OF VIETNAM ETFs? THE ONE GUIDE YOU NEED HERE

A couple of months back I wrote a blog post looking at a few of the best Vietnam ETFs to invest in. I had a bias to the ones that had been around since about 2009 and listed on key stock exchanges on New York and London.

VIETNAM ETF LIST – THE COMPLETE GUIDE

Even though I focused on some of the well know Vietnam ETFs that came up in my searches, I do realise there are actually a lot more out there. To add some more clarification on the bunch of Vietnam ETFs available, I thought I would try cover them all briefly here. Read on to see why we have such a wide choice of Vietnam stock market ETFs.

To recap from when I last discussed Vietnam ETFs in detail, here is my summary on 3 Vietnam ETFs listed on key stock exchanges.

LIST OF THE BEST VIETNAM ETFs?

WHAT IS THE BEST VIETNAM ETF ON THE STOCK MARKET?

I shall now place those 3 ETFs in the discussion below to get some context where they fit in and why the need / reasons for so many Vietnam stock market ETFs out there.

An updated fuller list of the Vietnam ETFs out there I thought was warranted given the major growth of them recently, in particular the surge in local Vietnam listed domestic ETFs over the last year or two.

FOREIGN INVESTMENT IN VIETNAM / VIETNAM FOREIGN OWNERSHIP LIMIT

The main reason the list of local Vietnam listed domestic ETFs are growing is due to the issues surrounding foreign ownership limits (FOLs).

Now many listed companies in Vietnam have already opened up their company to 100% foreign ownership. However this doesn’t suit all companies. When you become more than 50% foreign owned then dealing with all the various regulations, compliance etc can become more complicated.

There has though still been a big change in the number of Vietnam listed companies willing to open up their ownership to foreigners. Many have decided to welcome foreign owners up to a point.

Another issue is that there still has been rules in place on FOLs for certain types of companies.

There was a key announcement a few years ago lifting some FOL restrictions, that made the limit capped at 49% for “sensitive and important” sectors. Also banks have FOLs of 30%.

What can therefore happen from a Vietnam ETFs perspective, is that it might want to buy a stock but it becomes problematic because of the FOL. For example the stock in question might be up against it’s limit, and the Vietnam ETF might be effectively set up and classified as foreign. Therefore the Vietnam ETF in that instance must look to buy stock from another foreigner who is holding it. Due to the demand / supply imbalances, sometimes such trades can occur at significant premiums.

BOOM IN LOCAL VIETNAM Exchange traded funds (etfs)

VIETNAM ETF LIST AND COMPARISON table

Contrast the above to the latest wave of new Vietnam ETFs that are often set up as locally listed, and therefore not subject to such FOLs and are at an advantage. A growing number of investors are coming to the conclusion that this exposure to the Vietnam stock market might be a better alternative compared to buying some of the older Vietnam ETFs that were setup from foreign bases many years ago.

HOW MANY ETFS ARE THERE IN VIETNAM?

At the time of writing as we soon head into 2022, there are at least 12 Vietnam ETFs as noted in the complete updated table guide below:

ONE AND ONLY COMPLETE GUIDE TO THE BEST LIST OF VIETNAM ETFS

VIETNAM ETFInceptionVietnam / ForeignAUMs USDm
FTSE Vietnam ETF2008Foreign394
VanEck Vectors Vietnam VNM ETF          2009Foreign554
iShares MSCI Frontier and Select EM ETF2012Foreign467
Dragon Capital E1VFVN30 ETF                  2014Vietnam451
SSIAM VNX50 ETF           2017Vietnam 12
Premia MSCI Vietnam ETF           2019Foreign 29
Dragon Capital VFMVN Diamond ETF     2020Vietnam542
SSIAM VNFIN Lead ETF                           2020Vietnam117
Mirae Asset VN30 ETF       2020Vietnam 17
Vina Capital VN100 ETF                            2020Vietnam 5
SSIAM VN30 ETF           2020Vietnam 4
Fubon FTSE Vietnam ETF2021Foreign355
Full table guide to list of Vietnam ETFs

Below is a brief description of the broad aim / purpose of each Vietnam stock market ETF above.

FTSE Vietnam ETF review

This ETF began all the way back in 2008 and most investors would access it via the London Stock Exchange. The FTSE Vietnam index it tracks is an index that specifically tracks the larger and more liquid stocks on the Ho Chi Minh Stock Exchange. These are the stocks deemed to have sufficient foreign ownership availability. It obviously wouldn’t be fair to track it against stocks without such foreign ownership availability, because being set up from a foreign perspective it would struggle to be able to buy such stocks.

VanEck Vectors Vietnam VNM ETF review

This ETF was the next one that began in 2009. Perhaps in part due to the issue of foreign ownership limits, this ETF enabled itself to also buy securities incorporated outside of Vietnam so long as they have the majority of their revenues / assets in Vietnam. This VNM ETF trades on the US exchange so is very popular there.

This differing angle it has taken has seen it recently hold circa 25% of the fund that is listed on foreign exchanges, mainly Taiwan and South Korea.

iShares MSCI Frontier and Select EM ETF review

To be clear, this is not a 100% Vietnam stock market related ETF, but rather an ETF for those investors that want exposure to a range of frontier market economies. I thought nonetheless it warranted an inclusion to my list here as it is also a popular US listed ETF. Also importantly the biggest country weight to this ETF is in fact Vietnam. This ETF commenced in 2012.

DRAGON CAPITAL E1VFVN30 ETF review  

In 2014 we saw the first domestic ETF in Vietnam with this VN30 ETF trading on the Ho Chi Minh Stock Exchange. With this first mover advantage, the manager here in Dragon Capital has seen it grow into being one of the big players amongst all the Vietnam ETFs.

The key difference here is that being setup in Vietnam, it is not restricted with that barrier I have been discussing of foreign ownership limits. It is still a passive strategy and like the name suggest is set up to track the basket of VN30 stocks. A cost-efficient vehicle to reflect the performance of Vietnam’s VN30 total return index. This index focuses on 30 large cap listed stocks on the Ho Chi Minh Stock Exchange that are very liquid.

SSIAM VNX50 ETF review

SSI Securities Corporation is a key player in the financial markets in Vietnam. A pattern I have observed in other markets, is that although one ETF provider might get a first mover advantage, the idea normally still attracts some competition.

SSI in 2017 established a local Vietnam ETF, but their version they started with tracked 50 companies, being the VNX50.

VNX50 Index comprises of 50 listed stocks in both Ho Chi Minh City Stock Exchange and Hanoi Stock Exchange. The index consists of 50 top ranking stocks in terms of market capitalization, liquidity and free float ratio in the VNX All share basket of stocks. Index constituents’ weight are capped at 10% within the index.

Some of the SSI ETFs are still quite small and growth has lagged what Dragon Capital have established on the local Vietnam ETF scene, but that could potentially evolve in the future.

Premia MSCI Vietnam ETF review

With the Hong Kong Stock Exchange being such a prominent exchange in Asia, it is not surprising we saw a Vietnam ETF pop up here in 2019. As this ETF is foreign based the index it is targeting to track takes into account size, liquidity and foreign ownership constraints. That is, it won’t have the same sort of access potential to Vietnam companies without much room for foreign ownership.

The MSCI Vietnam Index is designed to measure the performance of the large and mid-cap segments of the Vietnamese market. With 20 constituents, the index covers approximately 85% of the Vietnam equity universe.

This ETF is still relatively new and small for the time being.

DRAGON CAPITAL VFMVN Diamond ETF review

The Diamond ETF has been a very successful initiative from Dragon Capital and even though was launched just in 2020, has experienced huge growth to be almost the biggest (or near enough biggest) Vietnam ETF.

The reason it has been so popular is it specifically focuses on one of the frustrating themes when it comes to Vietnam ETF investing. That is, investors are frustrated that many Vietnam ETFs have issues with being able to invest in companies where the foreign ownership limits (FOLs) are full. The Diamond ETF attempts to solve this problem as it focuses on the stock that foreign investors often are forced to pay a premium on when trying to buy stocks where the FOL is full.

The VN Diamond index it tracks is one that consist of 18 companies chosen by the Ho Chi Minh Stock Exchange that represent a basket of stocks where FOLs are full.

SSIAM VNFIN Lead ETF review  

SSI Securities Corporation tried its hand with a couple of other local ETFs in 2020 and the SSIAM VNFIN Lead ETF gained a bit of traction. Like with the Diamond ETF, SSI saw a niche market to fill and came up with a solution.

Already in terms of the sector breakdown of the Vietnam stock market, financials make up a significant portion. Investors across Asia and elsewhere are familiar with this, and they are also familiar with the thesis on the promising outlook for the financials sector in Vietnam.

The sector is a beneficiary of the urbanisation process in Vietnam, that has been well documented as a bullish story. The number of people using banking and related products has a lot of room to grow. We saw a good example with that with the surge in stockbroking accounts I have highlighted in Vietnam over the last 12 months.

This ETF tracks an index of Vietnam’s leading financial companies (at least 10), with a weight limit of 15% in a stock.

Mirae Asset VN30 ETF review

This another local Vietnam listed ETF that once again is tapping into the demand for investors out there that want their ETF to be able buy stocks that are capped out on FOLs.

A differentiating point in a minor way is that in this case although the vehicle is listed on the Vietnam exchange, it is the first of such that has come from a foreign funds management firm.

Mirae Asset Global Investments are the provider here, who started and most well known in South Korea, but have expanded across Asia and globally.

The basic VN30 Index consists of 30 stocks selected in consideration of their positions as blue-chip companies including their market capitalization and liquidity, among the listed companies on the Ho Chi Minh City Stock Exchange, and will be rebalanced once a quarter.

Mirae have been a more recent competitor in terms of establishing themselves in Vietnam. With their distribution reach across other parts of Asia it is not surprising to see them launch a local Vietnam ETF as they try and establish more of a footprint in the Vietnam securities industry.

Vina Capital VN100 ETF review

Vina Capital have such a strong brand across the various asset classes, being one of the first major players in the markets. They are big in the closed end and opened end fund space which I have regularly mentioned on this blog, therefore it is not surprising to see them also establish a Vietnam listed ETF in 2020.

With so many new local Vietnam ETFs coming on to the scene in the last year or two as this blog post it showing, it makes sense for VinaCapital to come up with a bit of a different angle. In this case they are tracking a larger group of stocks.

VinaCapital VN100 ETF is an Exchange Traded Fund that seeks to replicate the performance of the VN100 index.

The VN100 is a free-float adjusted market capitalization weighted index which measures the performance of the top 100 largest and most liquid stocks listed on the Ho Chi Minh City Stock Exchange (HOSE).

SSIAM VN30 ETF review

Another more recent offering in the local Vietnam listed ETF space from SSI Securities, but this time tracking the VN30.

Fubon FTSE Vietnam ETF review

For a bit of a change in recent times, in 2021 we saw a new foreign based Vietnam ETF with the Fubon FTSE Vietnam ETF. The target market is investors who trade on the Taiwan stock exchange, where this ETF was listed in April this year. It was a very successful launch, straight away making it into 6th spot in terms of size of all the Vietnam ETFs I have discussed here. It tracks the FTSE Vietnam 30 index.

how to invest directly on the vietnam stock market?

You can see now why I chose to do another article with Vietnam ETF summaries, because so many new products have come about in the last couple of years. It offers food for thought in terms of the issue surrounding FOLs. It might be another temptation for some to have a stockbroking account with direct access to the Ho Chi Minh Stock Exchange.

Those that are not interested in the Vietnam locally listed ETFs that have grown in the last couple of years, I still thought it is useful to be aware of them nonetheless. When searching for Vietnam ETFs it might be confusing coming across all these new products. Hopefully this blog post now provides some context regarding that. Feel free to let me know your thoughts in the comments area below.

Is Vietnam a good investment?

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