Merryn's Blog

A new way to tap into Vietnam

Vietnam has huge potential. But until now there’s been no effective way for investors to buy in. A new fund aims to change that, says Merryn Somerset Webb.


You might remember me writing about a particularly good group of Vietnam based fund managers SSI Asset Management coming to see me in Edinburgh last year. They've just been through again, so this is just a quick update.

The firm has two Vietnam funds on the go. Both have fabulous records the SSI Sustainable Competitive Advantage Fund is, for example, up 14% since its inception in September 2104 against a market return of -12%, and 7% from the next best fund in the market (VN Holding Ltd). But we can't invest in either of them (one is for local investors and one is for institutional investors).

Subscribe to MoneyWeek

Become a smarter, better informed investor with MoneyWeek.

That's particularly frustrating, given the potential of the Vietnamese market. It's got a young and well educated population (average age 29, literacy rate 94.5% and educational attainment levels just below Germany and just above Australia).

It's becoming the production hub of choice for firms priced out of China and Taiwan, and domestic consumption is rising nicely too: from $46bn in 2012 to a forecast $940bn in 2030. Inflation and interest rates are at the right sort of levels (3% and 5%) and GDP growth is not far off 7%.

Advertisement - Article continues below

At the same time, its stockmarket is super-cheap but with fast improving corporate governance: nearly 400 stocks have p/e ratios under ten, and some 50% of companies trade below their book value. And you get dividends too the average yield is just under 4%.

There is good news. In June, the firm is launching a new UCITS fund that you will be able to buy on most UK platforms. It's to be called the Vietnam Value and Income Fund and will follow a similar strategy to the fund mentioned above seeking out undervalued and under-researched stocks (SSI has 20 people in Vietnam) in what is already a cheap market.

The managers expect the final portfolio to have an average yield of around 5.5%, an average p/e of nine and an average price to book ratio of around 1.6.

The new fund won't be particularly cheap (there's to be a 1% management fee and a performance fee too). But if it performs as well as the other funds in SSI's portfolio, you probably won't mind this as much as you usually do.

I'll let you know when it launches it's worth noting that if it does well it won't be open to us for long: the managers intend to cap its size at £200m (something I thoroughly approve of!).



Investment strategy

Beware the hidden risks when investing in emerging markets

Emerging markets look cheap compared with developed countries, but earnings may be less trustworthy.
23 Dec 2019
Emerging markets

Emerging markets: buy when the news is bad

Emerging markets are being squeezed by local turmoil and by more general factors. But bad news can spell opportunity for investors.
5 Nov 2019

Emerging markets bounce back after a miserable few months

Investors in emerging markets have been enjoying some long-awaited relief after a miserable few months.
13 Sep 2019
Emerging markets

Strong dollar squeezes Asian markets

Trade war uncertainty means that the MSCI Emerging Markets Currency index is on course for its worst month since May 2016.
30 Aug 2019

Most Popular


Currency Corner: how high can the pound go against the euro in 2020?

In the month in which we should finally leave the European Union, Dominic Frisby takes a look at the pound vs the euro and asks just how high sterling…
13 Jan 2020

Where will markets be in 2030? Here are 20 forecasts for the 2020s

A lot has changed in the last ten years – stockmarkets soared, technology transformed our lives and politics has changed beyond measure. Here, Dominic…
14 Jan 2020
Personal finance

How much the state pension will rise by this year

While Boris Johnson promised to hold a full budget within 100 days of his election victory, many of the details of next year’s state pension increases…
10 Jan 2020

Money Minute Wednesday 15 January: UK inflation and house prices

In today’s Money Minute, we look ahead to the latest UK inflation and house price figures, plus we have Germany’s GDP data for 2019.
15 Jan 2020