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).
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%.
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!).