Why I’m investing in Vietnam – and the right way to do it
“How stupid can you get?” was a question teachers often used to ask me. “How stupid do you want?” was always my reply.
Over the last few years I have written articles about the attraction of Vietnam as an investment destination. Before proceeding further I must admit to travelling there 56 years ago when in the Merchant Navy, and now my youngest brother is a doctor in Ho Chi Min City. His experiences, and my recent visit, confirm my opinion of this country.
The population of Vietnam is around 93 million with an average age of 35 years. More than half now live in the cities and have aspirations to live a western lifestyle – this includes mobile phones and the internet.
Originally the roads were packed with bicycles, then it moved to scooters (carrying the whole family plus livestock) and now there are cars. Vast sums of money are being spent on roads, rail and infrastructure in general.
The country is self-sufficient in oil and rice, and the surplus is supplied into the rest of the Asian community. China, America and Japan have offshored manufacturing here for a number of years due to the low wages and the ‘can do’ attitude of a young population. When these countries do well, then, so do the Vietnamese.
Just look at the graph below, showing two means of investing directly into Vietnam.
In 2003, one of my first investments ever was into the VinaCapital Vietnam Opportunity Fund (VOF) where my money almost doubled before I exited in 2007, fortunately ahead of the world markets collapse of 2007/8.
I revisited Vietnam five years ago to holiday with my brother, and the activity there was simply startling. On my return to the UK I observed how the Saltydog Investor numbers covering Asia and the Pacific region appeared to be turning favourable, so I reinvested.
Here is the rub, and the reason I was reminded of my old school teachers. Although I was aware of two ways to make an investment into Vietnam, through an investment trust or an ETF, I only ever used the VinaCapital Vietnam Opportunity trust. This was the one I was familiar with, and I ignored the Vietnam tracker ETF. I put all my eggs into the one basket, and then compounded the error by not keeping track of the performance of the ETF (both investments feature in the Saltydog numbers).
A quick glance at the table for the last six months hammers home the error of my ways. That has now been rectified.
Now don’t get me wrong, this single investment has proved very lucrative. But it was poor decision-making to travel solo. I should have used both investment vehicles and made the trip in convoy.
As for the future, will this performance continue? Who can be certain, but if China and Japan continue to perform well, and they are on Vietnam’s doorstep, then why not? This probably also applies to the Asia Pacific region in general.
This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.