The DCVFM Diamond ETF delivered a return of 67.9 per cent in 2021, higher than any other Vietnam focused ETF, the firm says.
Dragon Capital Vietfund Management (DCVFM), founded in 1994 and the largest independent asset management company in Vietnam, recorded 67.9 per cent and 45.4 per cent (both in USD terms) growth in its DCVFM Diamond ETF (Bloomberg: FUEVFVND VN Equity) and DCVFM VN30 ETF (Bloomberg: E1VFVN30 VN Equity), respectively, for 2021. Both outperformed the Vietnam Index which increased 39.0 per cent for the year.
The firm writes that there were fourteen Vietnam-focused ETFs in operation at the end of 2021 with a combined AUM of USD3 billion, of which Dragon Capital’s two domestic ETFs made up USD1.1 billion of this figure – USD598 million in the DCVFM Diamond ETF and USD474 million in the DCVFM VN30 ETF.
Both of Dragon Capital’s ETFs are locally listed on the Ho Chi Minh Stock Exchange, where the total AUM of Vietnam’s nine domestic ETFs totals USD1.3 billion. A further USD1.7 billion trades on overseas stock exchanges.
The DCVFM Diamond ETF, which saw an NAV increase of 67.9 per cent in 2021 – the highest of any Vietnam-focused ETF – replicates the performance of VN Diamond Index as closely as possible. The DCVFM Diamond ETF finishing 2021 with total NAV of USD598 million means the fund has seen high levels of growth after being launched in April 2020 with just USD5 million.
The VN Diamond Index comprises of companies listed on Ho Chi Minh Stock Exchange (HOSE) which have no or very little availability for overseas investors to trade on the market, but can be owned through the ETF. Stocks must also satisfy an index criteria which includes market capitalszation, free-float, liquidity and P/E ratio, among other factors. As at 31st December 2021 the Fund had 72 per cent of its exposure in ten companies at their foreign ownership limit, with the remaining 28 per cent in seven companies calculated as being close to having no foreign room available.
Meanwhile DCVFM’s VN30 ETF had total NAV of USD474 million at the end of 2021 following an increase of 45.4 per cent for the year. The fund tracks an index of the top 30 companies listed in Vietnam adjusted for market capitalisation, free-float and liquidity. Last year, the Vietnam Index – which tracks the entire Ho Chi Minh Stock Exchange – returned 39.0 per cent, less than both the DCVFM Diamond ETF and the DCVFM VN30 ETF.
Suu Vu Duc, Head of Passive – Rule Based Strategies at DCVFM said: “The growth of Vietnam’s ETF market has come hand in hand with the broader development of Vietnam’s capital markets, which have come a long way since Dragon Capital launched Vietnam’s first domestic ETF in 2014.
With total market capitalisation of USD340 billion at the end of 2021 and average daily liquidity routinely over USD1 billion, index tracking funds are among a variety of instruments that are allowing investors greater access to companies at the forefront of the Vietnam growth story. Locally listed ETFs can provide overseas investors unrestricted access to Vietnamese listed companies, including those with no foreign trading room available, without any of the impediments a foreign-domiciled ETF is subject to.”
The top three sectors in the DCVFMVN Diamond ETF as at 31st December 2021 were banking (41 per cent of total NAV), followed by retail (16 per cent) and technology (14 per cent).
Following a mass inoculation campaign in the second half of 2021, more than 90 per cent of adults in Vietnam and more than 60 per cent of children aged 12-17 are double vaccinated. GDP growth for 2022 is targeted at a minimum of 6.5 per cent and is supported by positive export and supply chain shifts, a rapidly growing middle class, low interest rates and a government stimulus package.