ETF Talk: Vietnam is another Asian Alternative

Doug Fabian

Doug Fabian is known for his expert knowledge of ETFs, bear funds and enhanced index funds to profit in any market climate.

The past few weeks have taken us on a tour of investment opportunities in Asia and we now turn to Vietnam. The country is an agriculturally based, developing economy. Despite massive government interference, Vietnam is on-track for 5.65% growth this year. One way to invest in Vietnam is with the Market Vectors Vietnam ETF (VNM).

This non-diversified fund attempts to track the growth and performance, before fees and expenses, of an index of securities of Vietnamese companies. A company is considered Vietnamese if it is incorporated in Vietnam or if it generates at least 50% of its revenues or holds 50% of its assets there.

After enduring a slump this summer, VNM shares are up nicely from their August low. Last year, the fund logged a stellar performance of 23.71%. That return shows just how powerful the upside can be in the emerging markets of Asia.

VNM_101613

The top 10 holdings in VNM’s portfolio account for 59.47% of its assets. These holdings include: Bank for Foreign Trade of Vietnam JSC, 9.06%; Vingroup Joint Stock Company, 7.65%; Petrovietnam Fertilizer and Chemicals Corp., 7.05%; Bao Viet Holdings, 6.51%; and PetroVietnam Technical Services Corp., 5.26%. Key sectors in which VNM is invested include financials, 37.5%; energy, 23.1%; and industrials, 11.7%. It also is invested in materials, consumer discretionary and consumer staples.

Vietnam’s central plan includes a future focused on exports. The country is turning from a focus on agriculture (Vietnam is a lead producer of rice) and oil (Vietnam is the biggest producer in the region) to reorient towards manufacturing. If you want to follow this investment path, consider Market Vectors Vietnam ETF (VNM).

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