This month, SSI Asset Management (SSIAM), the asset management company under Saigon Securities Incorporation (SSI), is going to launch a new open-end fund that allows investors from Europe to invest in Vietnamese stocks.
The fund, named SSIAM UCITS—Vietnam Value Income and Growth Fund (VVIGF), is registered in Luxembourg. According to SSIAM CEO Le Thi Le Hang, at the moment SSIAM is finishing the procedures to set up the fund so that it can start operating at the end of June. Investors’ subscriptions to the fund are going to be sent to the fund’s transfer agent in Luxembourg right after the fund gets the license there.
VVIGF is going to focus on companies listed on the Vietnamese stock exchanges that have growth potential, high dividend yield, and are undervalued. Because VVIGF is an open-end fund, it is going to have to comply with investment restrictions according to UCITS regulations, including portfolio diversification among others.
Earlier, in December 2015, SSIAM launched another open-end fund with capital mobilised from European investors, named Andbanc Investments SIF—Vietnam Value and Income Portfolio (VVIP), of which SSIAM is the portfolio manager. Also registered in Luxembourg, this is a sub-fund under Andbanc Investments SIF’s platform, managed by Andbank Asset Management Luxembourg. The fund mobilises capital from professional investors, and with this fund SSIAM will hold a big stake in Vietnamese companies as well as improve the company’s value by joining its board of directors and/or supervisory board, consequently increasing the net asset value of the fund.
According to Hang, at the end of 2015 right after VVIP started operation, the fund’s net asset value was $13.9 million. Th current value is $20 million. “There are new investors and existing investors have increased their contributions, and the fund saw a pretty good rate of returns.” Hang explained. “We expect to increase the size of the fund in the near future,” she said.
Unlike VVIP, the upcoming VVIGF is specially tailored to individual investors from Europe with a relatively small minimum subscription (about $100), similar to the open-end fund model in Vietnam. The strategy is also different from that of VVIP in the sense that for VVIGF, SSIAM does not aim to hold a big stake in invested companies, but tries to diversify investment into listed companies with high liquidity.
According to Hang, in the process of mobilising capital for the two funds, VVIP and VVIGF, SSIAM has met with numerous money managers and private banks in Europe. “By talking to them we can see that European investors have a lot of interest in the Vietnamese stock market, and the Vietnamrdr stock market has a lot of investment opportunities for value investors,” Hang said.
Hang said that SSIAM is optimistic about the Vietnamese economy and stock market. “Vietnam is successfully following the model of export-led growth. It is also an attractive destination for foreign direct investment with many advantages in terms of population, high educational standards, and competitive labour costs. Vietnam also benefits from various free trade agreements, including the Trans-Pacific Partnership (TPP). The valuation of the Vietnamese stock market is relatively lower than its regional counterparts, with over 50 per cent of the stocks being traded at a single-digit price-earnings ratio and boasting a pretty high dividend yield,” she said.
At the moment, SSIAM also manages SSI Sustainable Competitive Advantage Fund (SSI-SCA), a domestic open-ended fund targeting domestic investors launched in September 2014. As of end-May 2016 the fund had a net asset value of VND130 billion ($5.8 million). SSIAM reported that in 2015 SSI-SCA’s rate of return was 17.7 per cent, compared to the 6.1 per cent increase in the VNIndex, and in the first five months of 2016 the rate was 9 per cent.