It’s only natural for investors to consider exposure to stocks outside the U.S. to tap into higher potential growth. Believe it or not, one of the hottest global economies right now is the small Southeast Asian nation of Vietnam.
Vietnam was one of the rare regions to post growth last year. What’s more, the country’s growth rate was red-hot with a 2.9% expansion. That topped even the consistently growing economy of China – which only posted a 2.3% growth rate last year.
Something for investors to note, however, is that the region is admittedly a bit quirky. In Vietnam, there are a small number of massive state-owned enterprises, including the Agribank financial institution, but outside of that the vast majority of companies are small or medium-sized ventures. This includes agricultural concerns as well as high-end tourism companies catering to wealthy international travelers.
Investing directly in Vietnamese companies isn’t particularly easy given this makeup. That said, for those who want to buy into a fast-growing region, there are a couple exchange-traded funds, or ETFs, available to U.S. investors that offer some exposure to Vietnam stocks: The only "pure play" Vietnam ETF.
A creative way to invest in Vietnam.
The bottom line: Vietnamese investments.
The most obvious option in the small world of Vietnam ETFs is the VanEck Vectors Vietnam ETF (ticker: VNM ) – the first and only ETF exclusively focused on Vietnam.
Though its list of holdings is very slim, at less than 30 companies, the fund’s portfolio is directly focused on publicly traded Vietnamese companies and corporations with at least 50% of their revenues and related assets in Vietnam.
VNM’s top holdings include commercial real estate developer Vinhomes and agribusiness Vietnam Dairy Products.
This Vietnam ETF isn’t gigantic, boasts nearly $500 million in assets under management and has an inception date going way back to 2009. That makes it a direct but established play on the region. The fund returned roughly 10% to shareholders last year. It also comes with an annual expense ratio of 0.66%, or $66 for every $10,000 invested.
Unfortunately, aside from investing in a handful of thinly traded over-the-counter stocks headquartered in Vietnam, U.S. investors have few other good options to get direct exposure to this fast-growing nation.But there is one more creative way to play Vietnam stocks via a diversified international ETF. Vietnam is classified as a "frontier market" – that is, not a "developed market" like the U.S. or […]