The VanEck Vietnam ETF: What Would Ho Chi Minh Think

The VanEck Vietnam ETF: What Would Ho Chi Minh Think

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While Vietnam is still led by a Communist government, Ho Chi Minh now has the country’s stock exchange named after him and it’s located in the old Saigon. World’s change!

The International Monetary Fund ranks Vietnam 3rd in projected GDP growth thru 2026. While climbing, wages in Vietnam are more competitive than China. That should help exporters compete.

While the current world events make any investment more dangerous, if the experts are correct, Vietnam should do well, but its performance only rates a Hold at this time.

For those wanting a diverse fund that holds Vietnam stocks, there is one ETF that holds multiple Frontier Market country stocks where Vietnam is the largest exposure. It’s listed later.

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pawel.gaul/iStock via Getty Images Introduction

I am of the age where I had to register for the Vietnam War and get my draft number. The peace treaty was signed before I graduated from high school, so I avoided getting drafted. Two years later, Saigon was conquered and renamed in honor of Ho Chi Minh, the North Vietnamese leader dating back to WWII. As a committed communist, one has to wonder what he thinks of having a capitalist stock exchange in the city name after him?

How things change! The MSCI Vietnam Index was launched on Dec 18, 2007, and they became part of the larger MSCI Frontier Index at the same time. Frontier countries are the ones with active markets but don’t meet MSCI’s requirements to be classified as Emerging. Currently, there are 21 countries in the Frontier Markets Index, four of which are in Asia. Vietnam is the only one in Far East Asia. A look at Vietnam

Vietnam, or the Socialist Republic of Vietnam, is located at the eastern edge of mainland Southeast Asia, was formally established after the end of the Vietnam War. It covers 128,000 square miles; with a population of over 96 million, making it is the world’s 15th most populous country. Its capital is Hanoi and its largest city is Ho Chi Minh City.

Based on Purchasing Power Parity, or PPP, Vietnam ranks 116 in the world, just behind Jamaica and ahead of the Philippines. This is up from 130th ten years ago. On the economic freedom scale, while their score is improving, Vietnam ranks 62nd, the same as Russia and Belarus. I included that to mention the special risks when investing in a Communist country with a heavily controlled economy.

Some vital economic forecasts from the International Monetary Fund are: Vietnam With a projected GDP growth rate in 2026 is 6.94%, Vietnam ranks third in the world for that year. The world average for 2026 is 3.38%. Vietnam’s average growth rate from 1980-2026 is projected to be 6.37%. Vietnam The Investment forecast (32.21%) places them 24th on the list. Their 4% inflation rate is about double what is forecasted for the United States. Vietnam Based on exports and imports, they are 4X their world GDP weight, and slightly below their percent of the world’s population.

One reason some analysts like Vietnam, as it could be a manufacturing diversification option away from China. Secondly, as the cost of doing business reduces the reason for being in China, Vietnam’s lower cost gains attractiveness. Due to their size, China or India, volume and resource wise, have advantages over Vietnam, but wages currently favor the later. Even compared to their closest neighbors, Cambodia and Thailand, Vietnam’s labor costs are lower. Whether productivity offsets any of these comparisons, I could not find data to answer that question. Exploring the VanEck Vectors Vietnam ETF

Seeking Alpha describes this ETF as: VanEck Vectors Vietnam ETF is an exchange traded fund launched and managed by Van Eck Associates Corporation. It invests in public equity markets of Vietnam. It invests in stocks of companies operating across diversified sectors. The fund invests in growth and value stocks of companies across diversified market capitalization. The fund seeks to track the performance of the MVIS Vietnam Index. VNM started in 2009. VNM has $543m in assets and provides investors with a minimal yield of .52%. VanEck charges 61bps in fees; very common for Frontier Market funds. Examining the Index

An initial due diligence step for any fund that invests based on an index is understanding that index. The VNM ETF uses the MVIS Vietnam Index , which the provider, MV Index Solutions, describes as: […]

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