First Single-Country Frontier Market ETF Now Trading: VNM
Van Eck Global launched the Market Vectors Vietnam ETF (VNM) today. Not only is this the first US-listed Vietnam fund, but it is also the first of the MSCI-designated “frontier markets” to have its own single-country ETF. A remarkable achievement, especially in light of the fact that six emerging markets and six developed markets still do not have their own ETFs.
Jan van Eck, Principal at Van Eck Global, acknowledged in today’s press release that “Vietnam is currently facing the pressures of inflation and current account deficits” while emphasizing “the country’s market reforms should help its longer-term growth potential.” Another strength is Vietnam’s young demographics, with nearly half the 90 million population under the age of 25.
The underlying index, Market Vectors Vietnam Index, is owned by 4asset-management and currently has 28 constituents. To qualify, companies must generate at least 50% of their revenues from Vietnam or hold a dominant position in the Vietnamese market. Today, that means that ~68% of the index is composed of locally listed companies, with the other 32% being comprised of companies from Singapore (7.5%), United Kingdom (6.0%), Malaysia (5.1%), India (4.7%), Canada (4.5%), and others.
Currently, sector exposure is heavily tilted toward financials at 36.7%, followed by energy (19.1%), materials (12.3%), industrials 12.2%, and consumer staples 10.8%. The top holdings include Viet Nam Dairy Products (11.2%), Hoa Phat Group (7.3%), Saigon Thuong Tin Commercial (7.3%), HAGL (7.3%), PetroVietnam Fertilizer & Chemical (5.5%), and PetroVietnam Drilling and Well (4.7%).
Expenses for the new ETF are estimated to be 1.42% but will be capped at 0.99% until May 2010. The ETF is listed on NYSE Arca and options are expected at a later date.
As usual, Van Eck did a great job of supplying information for prospective investors including a fund overview, index overview, prospectus, and a special report entitled “The Investment Case for Vietnam”. They also have a quick facts document covering all their ETFs.
Photo credit: Kevin “Elvis” King
Disclosure: no position