BEST VIETNAM FUNDS 2022 – VIETNAM STOCK MARKET CRASH REVIEW

I have read some stock market participants describe the Vietnam stock market performance of 2022 as a “crash”. I don’t necessarily agree with that description, but whatever terms you use, there is no debating that the Vietnam stock market has had a tough time in the first 6 months of 2022! In this blog post I wanted to provide some context over how one should view this decline. I also wanted to check out and see how many prominent Vietnam funds have performed during this bear market.

IS THE VIETNAM STOCK MARKET CRASHING?

I believe the falls in Vietnam stocks witnessed thus far in 2022 must be seen in context that the market was one of the star performers in 2020 and 2021. That is whether you want to judge it from a regional perspective, or even an entire globe perspective where it still stood out as a great market.

It is natural that investors may look to bank some profits quickly with the backdrop of the S&P500 also slipping comfortably into bear market territory in 2022. Especially given many such investors were new to the market, as we saw a massive surge in new retail account openings and retail turnover levels. Therefore I wouldn’t regard this as “crash” like conditions.

VIETNAM STOCK MARKET RETURNS 2022

I believe stock market investors generally should always be prepared for the possibility of market indices falling 50% at any time. Whereas over the first 6 months of 2022, the Vietnam stock market fell about 20%.

For frontier markets like Vietnam, one should be open minded for even more volatility, perhaps even falls of greater than 50% if you invest at the wrong time. If you think that sounds extreme, go checkout the Vietnam stock market chart showing the years around 2008.

HISTORY OF THE VIETNAM STOCK MARKET

The below link discusses the entire history of the Vietnam stock market spanning a bit over 2 decades now. You can view there a chart of the massive decline seen around 2008, more than 70%!

VIETNAM STOCK MARKET HISTORY – VIETNAM STOCK MARKET (vietnamesestockmarket.com)

WILL THE VIETNAM STOCK MARKET CRASH?

So what would I view as a “crash” in the Vietnam stock market? Well if the market fell another 20% from here and in very quick fashion, then the crash term might be more appropriate.

That would mean total falls in 2022 of circa 40-50%, a scenario I still believe is very unlikely. Mainly for reasons I wrote about last year, refer below.

WILL THE VIETNAM STOCK MARKET CRASH AGAIN? – VIETNAM STOCK MARKET (vietnamesestockmarket.com)

I could be wrong though! Earlier I mentioned stock market investors generally should have the mindset the broader market indices could easily slump 50%. If you are an investor in frontier markets like Vietnam, you have to expect even more volatility and potentially sharper drawdowns.

WHICH VIETNAM FUNDS PERFORMED BEST IN THE 2022 BEAR MARKET?

For now though let’s get straight to the table below, showing which Vietnam funds performed the best as the Vietnam stock market (measured by the VN-Index), slumped some 20% in the first 6 months of 2022.

FUND NAMEFUND TYPE% RETURN FIRST 6 MTHS 2022
TCM Vietnam High Dividend FundActive unlisted open ended-9.7%
AFC Vietnam Fund                          Active unlisted open ended-10.1%
Vietnam Opportunity Fund (VOF LN)        Active listed closed end fund (CEF)-14.2%
Vietnam Holding Ltd (VNH LN)             Active listed closed end fund (CEF)-16.0%
Lion Global Vietnam Fund  Active unlisted open ended-16.4%
Amundi Vietnam Opportunities Fund       Active unlisted open ended-18.5%
TIM Vietnam Actively Managed Certificate     Active unlisted open ended-19.6%
Pyn Elite Fund              Active unlisted open ended-20.0%
Vietnam Enterprise Investments Ltd (VEIL LN) Active listed closed end fund (CEF)-20.1%
JP Morgan Vietnam Opportunities FundActive unlisted open ended-25.1%
Premia MSCI Vietnam ETF (2804 HK)                   Passive ETF-27.8%
Xtrackers FTSE Vietnam Swap UCITS ETF (XVTF LN)  Passive ETF-28.3%
VanEck Vectors Vietnam ETF (VNM US)  Passive ETF-31.9%
VIETNAM FUND RETURNS 2022 (6 MONTHS TO JUNE 30)

To do the above check on who were the best Vietnam funds for 2022 in terms of the first 6 months performance, I went back to an older blog post of mine from last year. I shall link to that further down, where I reviewed the most well-known Vietnam funds, whether that be CEFs, ETFs or unlisted open ended managed funds.

To keep things simplified, the table above I decided not to include some unlisted funds from VinaCapital and Dragon Capital. I figured they are already represented via VOF LN & VEIL LN respectively which are listed on the London Stock Exchange. These trade at sizeable discounts to NAV so might be the better alternatives from those 2 fund managers.

COMPLETE GUIDE TO REVIEW OF ALL VIETNAM FUNDS FOR 2023

I will soon refer to below to the older blog post last year where I tried to dig up the info on all the Vietnam funds I could find. I would like to emphasize that just thinking about performance over the first 6 months of 2022 is not all that helpful to judge if one should invest in a particular fund.

The reason I wanted to explore the performance in this brief 6-month time period, was to see if it made me slightly change my opinions I formed last year. That is, last year when I tried to assess the more longer-term merits or otherwise of all the various Vietnam managed fund products.

Another reason was to explore how funds were performing in a down market. This year has been quite different from when I previously examined the funds. Last year was coming off very strong Vietnam stock market performance over all time periods.

As it happens, my more preferred Vietnam funds from looking at longer term data last year actually also generally performed better than average in the first 6 months of 2022.

With the caveat that these may not suit everyone, I thought that contrary to a lot of opinions I found online, that there were preferable options to the popular VanEck Vectors Vietnam ETF (VNM US). I thought that large closed end funds where you can often buy at a 20% discount to NAV were relatively more attractive for larger cap Vietnam stock market exposure. I speak of for example Vietnam Opportunity Fund (VOF LN) which is managed by VinaCapital, and Vietnam Enterprise Investments Ltd (VEIL LN), managed by Dragon Capital.

Some open ended managed funds I wrote positively about were AFC Vietnam Fund which is managed by Asia Frontier Capital, and Pyn Elite Fund managed by Pyn Fund management. AFC Vietnam Fund is smaller in size and may have more upside potential if it has success identifying smaller companies. Pyn Elite Fund has been around a long time with very good results, and the fund manager is prepared to take concentrated bets on his views.

For those that want to think about what might be their best fund options for Vietnam stock market exposures heading into 2023 and beyond, my blog posts from last year might be a useful guide. If you want to go back and read my complete Vietnam fund reviews based off what has occurred over longer time periods, I have included the links below to check out:

WHAT ARE THE BEST VIETNAM FUNDS TO INVEST IN? (OPEN ENDED) PT 2 – VIETNAM STOCK MARKET (vietnamesestockmarket.com)

WHAT ARE THE BEST VIETNAM FUNDS TO INVEST IN? (OPEN ENDED) PT 1 – VIETNAM STOCK MARKET (vietnamesestockmarket.com)

CONCLUSION ON HOW VIETNAM FUNDS NAVIGATED THE 2022 BEAR MARKET

In summary looking at the performance table of Vietnam funds for the first half of 2022, I would have to say generally speaking the active funds (despite higher fees) were the better place to be invested.

Readers who are only experienced for example with the US stock market might be somewhat surprised at this. They might be well aware that low fee index funds probably do better than their active counterparts in 90% of cases over very long time periods.

Yet it does make some sense that this phenomenon may not be the case in the Vietnam stock market. It stands to reason that if frontier markets are less efficient, and there is less competition from active fund managers, perhaps they can justify their higher fee structures after all.

Is Vietnam a good investment?

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Thanks!

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