VNM ETF

The VanEck Vietnam ETF has underperformed in 2024, falling by -9% YTD, while emerging markets have gained 8% and global stocks have performed even better. VNM offers superior tradability and income compared to the Global X MSCI Vietnam ETF, while the risk and return profile of both these products look similar. Vietnam's encouraging GDP momentum faces risks from potential U.S. tariffs and enhanced re-labeling investigations, while India too has started levying tariffs on Vietnamese steel exports.

The VanEck Vietnam ETF (VNM) gained 2% over the past month. One obvious reason for that rally is recent commentary from index provider FTSE Russell.

I maintain a hold rating on the VanEck Vietnam ETF due to its low valuation but weak momentum and technicals. VNM has significant exposure to Real Estate and Financials, sectors sensitive to interest rate changes, and lacks Information Technology exposure. The ETF's concentrated portfolio and high historical volatility present elevated risks, despite a low price-to-earnings ratio and high long-term EPS growth rate.

Vietnam could be poised to replace China as a regional manufacturing hub due to its young population and rising geopolitical tensions between the U.S. and China. The VanEck Vietnam ETF provides convenient exposure to Vietnamese equities. However, the VNM ETF is not well-balanced, with a heavy allocation in Vingroup, a struggling Vietnamese conglomerate.

Vietnam remains the best-performing equity market in Southeast Asia. The future growth potential is as strong as ever, yet valuations aren't all that demanding. As the largest and most liquid ETF play, VNM screens attractively.

Vietnam stocks are among the best performers in Southeast Asia to start 2024, and the VanEck Vietnam ETF (VNM) is participating in the rally. The original ETF dedicated to Vietnam equities is beating the MSCI Emerging Markets Index by a margin of better than 3-to-1 this year, as of March 15.

Investors have long been tempted by China due in part to the country's rising middle class and an increasing number of wealthy citizens. While those factors remain at play, a more nimble, less controversial market offers its own strong wealth-creation potential: Vietnam.

Along with China and Asian countries celebrating the Lunar New Year, the Vietnam market has been closed since February 8th. The HOSE (Ho Chi Minh Stock Exchange) opens again this Thursday the 15th.

After a challenging 2022, Vietnam equities rebounded strongly through last year. While valuations are higher now, they remain undemanding on a relative basis. VanEck's Vietnam ETF remains the go-to US-listed vehicle for country-specific exposure.