The Vietnam Fund gained +1.6% in March with a NAV of USD 1,826.89, bringing the return since inception to +82.7%. This represents an annualized return of +12.1% p.a. The Ho Chi Minh City VN Index in USD gained +1.6%, while the Hanoi VH Index added +1.5% (in USD terms). The broad diversification of the fund’s portfolio resulted in a low annualized volatility of 8.58%, a high Sharpe ratio of 1.31, and a low correlation of the fund versus the MSCI World Index USD of 0.26, all based on monthly observations.

Market Developments

Once again, the largest companies showed the highest volatility over the past month. Some of the highest weighted stocks surged 8-10% early in the month but gave everything back in the second half, before moving up slightly again in the last few days.

With the continued volatility in blue chips we are asking ourselves what kind of return the average non-institutional investor is looking for? Sure, everybody would like to earn 20% in a 0%-interest rate environment which would translate into around 1.6% a month without much fluctuation or volatility. The reality, as we know, is quite different. Just a few months ago, back in November 2018, the end seemed to be near and people were scared to death to lose their shirts. But after a big Christmas feast and a fancy New Year’s celebration investors seemed to have forgotten their worries and jumped right back into the stock market. After some gains they even became excited and bullish again.

Over the past few days a correction set in which was triggered by fears of a slowing global economy (again!) and after interest rate expectations for the USA slowly reversed. In late fall, investors feared that the FED would continue raising interest rates with at least two increases in 2019 (which would have been negative for Emerging Markets). Now people are scared of the idea that the FED could even have to lower interest rates because of the same fears investors had a few months ago – a slowing global economy.