VietNam Holding (VNH) aims to generate long-term capital growth through investing in companies listed in Vietnam, employing a fundamental approach. The fund has undergone significant changes since September 2017, including the appointment of a new board and management company, to address previous governance and performance shortcomings. The wide discount to NAV partly reflects these historic issues, and has been amplified by weak investor appetite for Vietnam equities due to uncertainties such as the impact of the coronavirus outbreak. The restructured VNH may provide long-term investors with the opportunity to participate in Vietnam’s strong medium- to long-term economic prospects, with the potential of a narrowing discount should some of the above concerns be alleviated.
Vietnam is one of the fastest-growing economies in the world, according to International Monetary Fund forecasts. Although expectations are likely to be tempered in the short term by the coronavirus outbreak, the country has positive secular trends, including rising disposable incomes, urbanisation and industrialisation, which drive multi-year growth opportunities for its companies.
- The manager follows a rigorous investment process, with environmental, social and governance (ESG) considerations a key part of its approach.
- Mid- to small-cap focus gives investors exposure to less well-researched, highgrowth companies.
- VNH has been restructured by a relatively new and proactive board, which is committed to promoting shareholders’ interests.
VNH’s current 23.1% discount to its NAV is appreciably wider than the three-year average of 16.0%. The portfolio also has potential hidden value that is not fully reflected in the NAV, due to Vietnam’s foreign ownership limit (FOL) rules. There are multiple drivers that may help the discount to narrow, including improved performance under the new manager, and a turnaround in investor sentiment.
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