VanEck Vietnam ETF (VNM): Flawed But Still an Easy Way to Cash in on Vietnam’s Frontier to Emerging Market Upgrade (EMS Substack)

• Vietnam’s efforts to reform in order to upgrade from frontier to emerging market status warrants a closer look at the country and its primary ETF.
• The VanEck Vietnam ETF (VNM) better reflects the Vietnam market than ten years ago, but remains flawed.
• VNM has a nearly 10% exposure to Taiwan listed stocks, a 29% weight in real estate and a 12.6% weight in financials. 
• While not the perfect investment vehicle to gain exposure to Vietnam, the VNM remains the easiest way from American retail investors to cash in on the country’s stock market reforms and coming index upgrade. 

Ten years ago, I wrote a Seeking Alpha article with a generally negative take concerning Vietnam and the (flawed) VanEck Vietnam ETF (VNM) (See: Apocalypse Now For Investors? A Vietnam Investment Review (And Reality Check). However, Vietnam’s efforts at making reforms in order to upgrade from frontier to emerging market status warrants a closer look at the country and its primary ETF for American retail investors (Also see: Digging Deeper: Vietnam’s Stock Market Reforms and Frontier Market Status Update). 

NOTE: I had submitted roughly this same article (minus the better charts etc) early last weekend to Seeking Alpha as an update to my previous one to also see how much trouble their young editors are to deal with these days. Alas, their editors have gotten much worst! Among the twelve (yes twelve!) suggestions to meet their new article and profile criteria, they want a much more narrower focus:

(1) Much of the article is focused on background detail about what’s happening with regard to investing in Vietnam. While this is certainly important information, given that the article is seemingly about investing in VNM, the latter is what the main focus of the piece should be. As such, we’d suggest trimming the first part of the article down to just the most important and relevant facts. You’ll want to make sure that the investment idea for VNM is front and center and the main focus here.

Investing in frontier or emerging markets (or any investment with exposure to such markets) warrants a much deeper look at the individual market itself rather than the cursory glance the young editors at financial publications like Seeking Alpha seek for their paid subscribers and readers. That’s what makes independent publishing platforms like Substack so valuable.

In the future and in addition to free content, I will offer a paid subscription with the paid content mostly focused on analysing (e.g. filings, earnings calls etc) wanted or unwanted investment exposure to frontier, emerging or other potentially risky markets or current or potential conflict zones (e.g. Taiwan). In the wake of supply chain disruption, COVID lockdowns and Russia’s Ukraine invasion, I think this is an area that deserves more scrutiny and coverage.

In the mean time, please subscribe to our Monday morning emerging market updates (which may be subject to some further tweaking) e.g. Emerging Market Links + The Week Ahead (July 18, 2022):

Subscribe Now Via Substack

In addition, check out our emerging market ETF lists, ADR lists and closed-end fund lists (also see our site map + list update status as the lists are still being updated as of Summer 2022) along with our general EM investing tips / advice. All links to emerging market newspapers, investment firms, blogs and other helpful investing resources at the bottom of www.emergingmarketskeptic.com or on the menu under Resources have been updated.

DISCLOSURE: I DO NOT own shares of or options on the VanEck Vietnam ETF (VNM) nor plan to in the immediate future.

SUBSTACK ARTICLE LINK

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