Vietnam Holding (LON:VNH) is a closed-ended fund that invests in high-growth companies in Vietnam, focusing on domestic consumption, industrialisation and urbanisation. The London-listed investment trust, launched in 2006, offers nimble stock selection with integrated ESG.
“We have a team of 12 people on the ground in Vietnam actively managing the fairly concentrated portfolio”, said Craig Martin, chairman of Dynam Capital, the manager of Vietnam Holding.
Vietnam has liberalised its economy over the past few decades and has recorded high economic growth in the process. With the country’s ideal location for manufacturing and established trade deals, in addition to a young and increasingly literate population, this phenomenon shows no sign of letting up. Vietnam was one of the highest growing economies in the world last year at just under 3%.
“Many of you will think of Vietnam through the lens of the 50s, 60s and 70s when it was a country at war. However, the country has evolved into a stable centre for foreign direct investment and is a pre-eminent export player,” Martin said.
Emerging Consumer Market
Vietnam is seeing the emergence of a consumer market with increasing disposable income. While car ownership in the country has doubled over the past five years, there are still only 23 cars per 1,000 people in Vietnam, compared to 205 across ASEAN (Association of Southeast Asian Nations), and 200 in China. This is due to the high level of motorbike use, suggesting there is still room to grow for an automotive industry, typically associated with higher living standards.
Vietnam is also a fast-growing consumer market in terms of modern trade as swathes of convenience stores are popping up across the country’s major cities. The growth of its modern grocery stores is outpacing other ASEAN (Association of Southeast Asian Nations) nations.
Vietnam is playing an increasingly important role in the global supply chain. Having established trade partnerships with the WTO, ASEAN and the USA, Vietnam has been exporting progressively more goods to the rest of the world.
From just over 0.4% in 2010, Vietnam’s market share of global exports now stands at 1.5%, as it benefitted from recent trade tensions between America and China. Its exports to the US are valued at $83bn. Vietnam has also shifted from its reliance on agricultural products (rice, coffee and fruit) to include high-tech products such as smartphones, tablets, computers and accessories.
Vietnam’s government has plans in motion to turn the country into a modern industrialised economy. Over the next five years the government plans to mobilise $120bn in public investment projects. In addition, the government is implementing a new Law on Public Investment (2019) to encourage private investors to join via Public-Private-Partnership (PPP) initiatives. Craig Martin suggests that these policies will have a multiplier effect on economic growth which will benefit Vietnam Holding in the long-term.
Vietnam Holding Portfolio
The fund’s portfolio is concentrated with two thirds of its holdings in its top ten companies. Banks, the top sector, makes up 27% of the fund’s portfolio, closely followed by industrial goods and real estate at 22% and 15%. Its weighting towards industrial goods and real estate play towards the aforementioned processes of industrialisation and urbanisation in Vietnam, Martin explained during the March UK Investor Magazine conference.
Vietnam Holding is up by 9.2% since the turn of the year, and 59.1% over the past 12 months. The fund also trades at a discount to NAV at approximately 18%.