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The Vietnam Fund returned +1.9% in March with an NAV of USD 1,718.10, a new all-time high, bringing the net return since inception to +71.8%. This represents an annualized return of +18.0% p.a. The March performance of the Ho Chi Minh City VN Index in USD was also +1.9% while the Hanoi VH Index increased by +4.8% (in USD terms). Since inception, the AFC Vietnam Fund has outperformed the VN and VH Indices by +39.9% and +48.3% respectively (in USD terms). The broad diversification of the fund’s portfolio resulted in a low annualized volatility of 9.01%, a high Sharpe ratio of 1.98 and a low correlation of the fund versus the MSCI World Index USD of 0.30, all based on monthly observations since inception. The recent strong move in the Hanoi index was caused for a significant part by the index heavyweight Asia Commercial Bank, which cannot be bought by foreigners since its foreign ownership limit has been reached since a long time. The stock is up 40% since the beginning of the year. With a current weighting of
over 14% the stock helped the index to break out of its multi-year sideways pattern. If this breakout is confirmed, then a broader market rally this year is likely. It seems that smaller stocks are getting more attention again with the Hanoi index gaining ground relative to the bigger HCMC index recently, although market breadth corrected somewhat. At the end of March 2017, the fund’s largest positions were: Agriculture Bank Insurance JSC (3.1%) – an insurance company, Sam Cuong Material Electrical and Telecom Corp (2.4%) – a manufacturer of electrical and telecom equipment, Hatay Pharmaceutical JSC (2.1%) – a pharmaceutical company, Pharmedic Pharmaceutical Medical JSC (1.9%) – another pharmaceutical company, and Bibica Corp (1.9%) – a packaged foods manufacturer. The portfolio was invested in 81 names and held 5.6% in cash. The sectors with the largest allocation of assets were consumer goods (31.5%) and industrials (25.2%). The fund’s estimated weighted average trailing P/E ratio was 9.88x, the estimated weighted average P/B ratio was 1.61x and the estimated portfolio dividend yield was 6.88%.

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