If it’s not already, Vietnam Holding is fast becoming the UK’s leading vehicle for investing in Vietnam. For many years, VNH has outperformed its peers, and full-year results reinforce the investment trust’s dominance, both in terms of overall outperformance of the benchmark, and outperformance of its peers.
Vietnam Holding may not be the largest Vietnam specialist, but it is certainly the best performing. Over the past 52 weeks, Vietnam Holding’s NAV has increased 16.9%. The closest competitor has only produced an increase of 11%. One peer produced just 6% over this period.
Vietnam Holding has been voted as the best single country Investment Trust by UK Investor Magazine readers and CityWire users and the annual report released this week highlights why.
In the financial year to 30 June 2024, VNH’s Total NAV return was 23.6%, outperforming the benchmark by over 14%. VNH has now outperformed the index on a 1, 3, 5, 10 and 15 year basis.
Vietnam’s rapid expansion has been a significant tailwind for VNH’s performance, but it is VNH’s stock selection process and approach to Vietnamese equities that has generated peer group beating returns.
VNH has established key investment themes including industrialisation, urbanisation and digitalisation that run through the portfolio. The trust’s outperformance of peers is the result of a high-conviction strategy implemented by an investment team on the ground in Vietnam with intimate knowledge of the themes they pursue.
For example, the management team have decided technology company FPT deserves 14% of the trust’s NAV. This decision has rewarded investors by FPT gaining more than 50% year to date.
FPT is at the forefront of Vietnam’s digitalisation demonstrated by a strategic partnership with Nvidia to build AI research centres in Vietnam and data centres in Japan.
High conviction selections such as FPT have been integral to VNH’s success and this strategy and selection process was explained by the management team in their annual report.
“The portfolio remains concentrated, with the top ten holdings accounting for 63.2% of the portfolio’s Net Asset Value,” explained Craig Martin, Chairman of Dynam Capital, the manager of Vietnam Holding.
“This is the direct result of our active portfolio construction. Initial position sizing is based on our conviction-led approach to investment decision making. We often start a new position at a modest conviction level of roughly 2% of NAV, increasing to a midlevel of 4-6% and then high conviction level of 8% when we become more comfortable with the company and more assured about the sustainability of its strategy.
“The portfolio is comprised of 24 companies, all of which have been thoroughly researched. At any one time there are another 12-20 companies that we monitor closely and review on a regular basis, looking for catalysts for new growth. We also research promising newer companies, albeit our investment bar is extremely high, as we seek companies with acceptable valuations, strong growth prospects and a desire to engage with us on a journey of improving governance, investor relations and sustainability reporting.”
When Vietnam Holding was at 370p in March this year, we published an article outlining why we thought Vietnam Holding had further to run. With shares in the trust now above 400p, the factors that made VNH look attractive in March are still intact and point to further NAV appreciation.