The Vietnam Fund returned +1.2 % in July with a NAV of USD 1,836.89, bringing the return since inception to +83.7%. This represents an annualized return of +11.5% p.a. The Ho Chi Minh City VN Index in USD gained +4.8%, while the Hanoi VH Index added +1.3% (in USD terms) in July 2019. The broad diversification of the fund’s portfolio resulted in a low annualized volatility of 8.53%, a high Sharpe ratio of 1.23, and a low correlation of the fund versus the MSCI World Index USD of 0.29, all based on monthly observations.

Market Developments

While earnings announcements for the second quarter are ongoing, banks and Vincom Group stocks led to a strong recovery of the Ho Chi Minh Index. Vietcombank, one of the leading banks in Vietnam, will become an insurance-distribution partner for Prudential Plc. and Hong Kong billionaire Richard Li’s FWD Group. Based on unofficial sources, it is expected that Vietcombank will receive an initial payment of about USD 400 mln and additional payments depending on business performance.
It is interesting to note that with the exception of the expensive Vincom-Group-stocks driving the HCMC Index, all other important indices were down over the past 3 months. Our fund, which is relatively uncorrelated, benefitted from some moves in inexpensive stocks which reported excellent earnings, like our biggest holding, the insurer Agriculture Bank Insurance (ABI), which rallied 20% over the past 3 months and is still trading at an unbelievable 4.7x price/earnings ratio, based on our 2019 estimates.

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