Dragon Capital Vietfund Management (DCVFM) | Fund Factsheet

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VietFund sees foreign demand as driving force of Vietnam’s ETF market


VietFund Management (VFM) expects the Vietnam ETF market to become a bright spot among its Southeast Asian peers amidst increasing interest from foreign investors.

Luong Thi My Hanh, the Ho Chi Minh-based manager’s deputy chief executive officer, pointed out to Asia Asset Management that the growth of Vietnam’s ETF market is likely to be driven by a number of encouraging developments in the domestic stock market. These include the authorities taking steps to improve market capitalisation and liquidity for the country to break into the emerging market rank, whilst looking to introduce more derivatives products and setting out regulations to better govern the market.

The newly developed Vietnam ETF market is still in its infancy, taking into account its history and the number of products available to investors. There are now two domestic ETFs listed on the Ho Chi Minh Stock Exchange and the Hanoi Stock Exchange, respectively. The first one is the VFMVN30 ETF, which has reached an asset size of approximately US$15 million since its inception in October last year. It tracks the largest 30 companies listed on the Ho Chi Minh Stock Exchange. Following its introduction, SSI Asset Management launched the SSIAM HNX30 ETF, which tracks the performance of the largest 30 Hanoi-listed companies.

Reviewing the development of the domestic ETF market, Ms. Hanh singled out foreign demand as a dominant force. “After one year operating, the demand for the VFMVN30 ETF from international investors has been larger than the demand from domestic investors since the beginning of August 2015,” she said. “For the last two months, foreign investors increased their investments to the VFMVN30 ETF more than four times, while domestic investors increased their investment to it less so. As of September 22, 2015, the foreign investors’ proportion exceeded the domestic investors’ proportion, with 53.9% and 46.1% respectively.”

On this front, Ms. Hanh said the firm now focusses on expanding its investor base in Europe, Japan, Thailand, Korea and Hong Kong. She added that the firm has striven to set up a system, which supports ETF trading so that investors can now easily trade the ETF via both the primary and secondary markets.

Looking ahead, Ms. Hanh said the firm intends to broaden its variety of ETFs based on market capitalisation, stock selection styles and sectors.