The Global X MSCI Vietnam ETF was launched in December 2021. I suspect part of the opportunity for this ETF to be successful might have been based upon how the VanEck Vietnam ETF has shown a poor record since inception way back in 2009.
Unfortunately however this new Global X MSCI Vietnam ETF is ironically off to a poor start.
I can see how the ETF providers might still see a good future for it though. There are many US investors who look for a Vietnam ETF on the US exchange and are not quite satisfied with the long running VanEck Vietnam ETF.
In this blog post I will outline where this new Global X MSCI Vietnam ETF might fit in for some investors, in the context of comparing with the likes of the VanEck Vietnam ETF.
GLOBAL X MSCI VIETNAM ETF (VNAM) SUMMARY
- What index it tracks – The Global X MSCI Vietnam ETF (VNAM) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Vietnam IMI Select 25/50 Index.
- Size – Approximately US $5.4 million as at August 31, 2022.
- Inception Date – 7th December 2021.
- Management Expense Ratio (MER) – Approximately 50 bps.
- Dividend Yield – Approximately 0.23%.
- Average Daily Volume – Approximately 3,300 shares, or circa $55k worth.
- Top 5 holdings – Vinhomes , Vingroup, No Va Land, Hoa Phat Group & Masan Group, these 5 total about 37% of the fund at October 6, 2022.
GLOBAL X MSCI VIETNAM ETF (VNAM) HOLDINGS
GLOBAL X MSCI VIETNAM ETF (VNAM) PERFORMANCE
GLOBAL X MSCI VIETNAM ETF (VNAM) SECTOR EXPOSURES
PROS N CONS OF GLOBAL X MSCI VIETNAM ETF (VNAM)
- Convenience of trading on the US market.
- The MER is lower than another popular ETF among its peers, i.e., 50bps rather than 60bps.
- The index construction methodology means that there are limits to how concentrated it becomes (i.e., The weight of the largest company in the Index is capped at 25%. & The aggregate weight of all companies representing more than 5% of the Index cannot exceed 50%.). ETF investors often tend to prefer this more diversified approach.
- Likewise due to the above index construction methodology, ETF investors may prefer that this gives the product more exposure to the mid / smaller end of the Vietnam stock market in comparison to some of its peers.
- Low volume combined with bid ask spread of circa 70 bps
- Short history, low AUMs, will the product last in the very long term?
- Like other Vietnam ETFs they may well underperform many active Vietnam managed products, there doesn’t seem to be strong arguments to suggest otherwise. I have covered this aspect on various blog posts on this site.
- VNAM ETF does not have the same access to Vietnam listed stocks that are near their foreign ownership limits (FOLs), unlike many Vietnam listed ETFs.
VNAM VS VNM ETF COMPARISON FOR VIETNAM ETFS
|VOLUMES||low volumes traded||greater liquidity|
|O/S STOCKS HELD||all Vietnam listed stocks||Recently held 18% stocks listed South Korea, Taiwan, Japan.|
|DIVERSIFICATION||66 holdings, likely less concentrated larger positions.||59 holdings and more potential to have larger bets on top positions.|
|MID / SMALLER COYS HELD||More likely to hold a bit more exposure to mid / smaller Vietnam listed companies.||Less likely to hold smaller Vietnam listed companies.|
VIETNAM ETF RESEARCH
If you want to learn more about factors like active vs passive in Vietnam, foreign ownership limits (FOLs), different Vietnam ETF structures, etc I recommend these other blog posts of mine below:
COMPLETE LIST OF ALL THE VIETNAM ETFs
Below you will get an understanding why there has been strong growth in Vietnam listed ETFs. You will also appreciate how foreign ownership limits (FOLs) are an important issue for Vietnam investors.
VIETNAM STOCK MARKET CRASH 2022
Only a few days ago the Vietnam stock market was making headlines for being one of the world’s worst performers over the last month as it showed falls of around 18% in such a short space of time.
It has not gone unnoticed by me that the Van Eck Vietnam ETF (VNM) listed in August 2009. Perhaps the idea to get the product going was made during the bull market a couple of years earlier? Whilst the timing could have been worse if they launched right before the Vietnam stock market crashed in 2008, it was still quite challenging as the Vietnam market struggled the first couple of years of this ETF around 2009-2011.
That has not helped the long term performance of the Van Eck Vietnam ETF (VNM), which reads poor as I have discussed previously on the blog.
It is somewhat ironic then that this new GLOBAL X MSCI VIETNAM ETF (VNAM) probably also was a concept thought of during the boom Vietnam stock market years of 2020-21, only to launch just before the big bear market of 2022! They might have thought an edge for their product would be to generate much better performance numbers since inception date compared with the long history of the Van Eck Vietnam ETF (VNM). However as we can see from their initial performance I posted earlier up to September 2022, it is off to a disappointing start!
Maybe the key message here is beware of the market when the marketing gurus are coming up with new ETFs for it.
SHOULD I BUY THE GLOBAL X MSCI VIETNAM ETF (VNAM)?
If an investor was only limiting themselves to the well-known Vietnam ETFs that trade on the US exchange here like the Van Eck Vietnam ETF (VNM) and the GLOBAL X MSCI VIETNAM ETF (VNAM), the latter relatively new ETF product offers some food for thought.
If you are frustrated by the long running VNM ETF and it holding a sizeable exposure to stocks listed on exchanges such as Japan, South Korea, Taiwan etc, (not unusual to be close to 20%), then the new GLOBAL X MSCI VIETNAM ETF (VNAM) might be more suitable for you.
However I would caution about the low AUMs and liquidity, my comments above refer to those investors that prefer to buy and hold for many years.
There might also be a small risk that the product does not gain traction and it doesn’t last for the long term, meaning you might then need to exit at an undesirable time for your circumstances.
At least they have launched something with a lower MER even if the timing has not yet been good. For those looking at Vietnam stock market exposure right now though, given the big battering of their market over the last month, I suspect the long term returns should be quite solid in the GLOBAL X MSCI VIETNAM ETF (VNAM) if measured from the time I am writing now.
VIETNAM CLOSED END FUNDS
I am still of the view however that despite their higher fee structures, Vietnam closed end funds are likely to continue to outperform the Vietnam ETFs I have just discussed.
For those wanting to read more about these CEFs, you can read the below link where I reviewed the options available last year.
vinacapital vietnam opportunity fund review
One CEF as mentioned in the above heading I recently did an in-depth review for the Seeking Alpha site. It may or may not be paywalled depending on one’s free article limit I am not sure, but here it is anyway..
VNM ETF REVIEW
Similarly, I also did an in-depth review on the VNM ETF, Seeking Alpha link below:
There is a huge amount of info for members, particularly on US listed stocks. Expect to see expert market analysis, proprietary quant ratings, unlimited call transcripts, exclusive author ratings, earnings calls on audio, and powerful stock screens. It could be a great tool especially for Vietnam based investors looking to explore and outperform on the US market.
Simply click on the below picture banner link to be eligible for the membership offer.
Is Vietnam a good investment?
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