Foreign investors at the Ho Chi Minh Stock Exchange (HoSE)(Photo: thoibaotaichinhvietnam.vn) "ETFis often a cheaper and more efficient alternative to other investment funds,especially during periods of high volatility," a recent report by Ho Chi MinhCity Securities Corporation (HSC) noted.
"Therefore,it is not surprising that Vietnam has followed the trend for ETF products."
ETFE1VFVN30, has grown impressively since its listing in October 2014. At peak time,the size of the fund was 389 million USD, 42 times higher than originally. Currently,the fund's assets are 372 million USD.
VFMVNDiamond ETF and SSIAM VNFIN Lead ETF, listed since May and March 2020, havealso attracted much attention. Total assets under their management arecurrently at 522 million USD and 87.5 million USD, up 99 times and 47 times,respectively compared with when they were listed.
Theyhave seen their net asset value (NAV) increasing faster than the generalmarket, 33.1 percent and 44.7 percent, respectively.
Thosethat have performed poorly since listing include the SSIAM VNX50 ETF and theVina Capital VN100 ETF.
TheHSC report added: "The lesson learned so far is that ETFs simply based onthe VN50 or VN100 indices perform worse than those based on selective indexesto suit the needs of hedge funds, or more knowledgeable domestic investors,such as VNDiamond and VNFIN Lead.”
Byfar, the most successful ETF in attracting domestic capital is VFMVN DiamondETF. This fund includes a number of stocks that have reached or are nearing thelimit of foreign ownership. By purchasing Diamond ETF certificates, foreigninvestors can indirectly invest in Vietnamese stocks that have reached themaximum foreign ownership ratio.
Launchedon May 2020 with an asset value of only 4.5 million USD, the assets of theVFMVN Diamond ETF fund has increased 99 times to reach 522 million USD atpresent and is currently the largest domestic ETF in Vietnam market.
This,according to HSC, could be attributed to new portfolio focusing on qualitystocks.
Thenumber of ETFs in Vietnam, including foreign ETFs and domesticETFs, currently stands at 12 funds, seven of which are domestic ETFs, witha total value of assets of 2.5 billion USD.
Globally,according to data compiled by ICI, assets in passive investment vehiclesreached 11.4 trillion USD at the end of November 2020, of which more than 6trillion USD were managed ETFs. According to Blackrock, assets in global ETFsare expected to reach 12 trillion USD by the end of 2023.
TheState Securities Commission (SSC) said in 2020 alone, there were fivedomestic ETFs established in Vietnam. These new ETFs are not only based on marketcapitalisation indices, such as the VN30 or VN100, but also adopt selectiveapproach to meet the needs of hedge funds and the specific requirements ofdomestic investors.
DomesticETFs in Vietnam are essentially open-ended funds and are managed by the StateSecurities Commission. They are usually listed on the HoSE and have to use abase index calculated by the HoSE, which is required by law.
Amongthe seven ETFs currently listed on HoSE, there are three ETFs using the VN30index as the base, two ETFs using the VN100 and VNX50 indices as the base, andtwo using the VNDiamond and VNFIN Lead indices as the base.
Sincedomestic ETFs are listed on HoSE, investors need a securities trading accountin Vietnam to trade.
ETFsare traded like any other stock on the HoSE with a minimum lot size of 100 fundcertificates.
Amongall the ETFs in Vietnam, the E1VFVN30 ETF is the only Vietnam ETF listed onThailand stock market, with trading code E1VFVN3001. Foreign investors can buyETFs in their home countries without setting up a trading account in Vietnam./.
VNA
