The Vietnam Fund returned +2.0 % in June with a NAV of USD 1,815.41, bringing the return since inception to +81.5%. This represents an annualized return of +11.4% p.a. The Ho Chi Minh City VN Index in USD lost −0.6%, while the Hanoi VH Index lost −0.3% (in USD terms). The broad diversification of the fund’s portfolio resulted in a low annualized volatility of 8.60%, a high Sharpe ratio of 1.22, and a low correlation of the fund versus the MSCI World Index USD of 0.29, all based on monthly observations.
Despite continuing uncertainties on Trump’s trade war and increasing risks of a real war with Iran, markets were calm. Outbreaks of military conflict are usually not a major disruptor for financial markets (except typically higher volatility in the first few days), as long as production and transportation of oil is not severely affected. Also, in the current conflict with Iran this does not seem to be the case, especially since trade with Iran has been sanctioned for some time already. Therefore, investors continue to look at other issues with the exception of US investors, who seemingly have no concerns at all. Otherwise, it is very hard to understand why some US indices just made new all-time highs while Europe continues to underperform and Emerging Markets trade at the same low levels as one and five years ago.
For that reason, we continue to see improving risk-reward ratios for selected Emerging Markets, especially for Vietnam.