Investment funds in Vietnam remain optimistic despite poor performance

Investment funds kept buying in stocks in January even though the market was turbulent. (Photo: tapchitaichinh.vn)

Vietnam Enterprise Investments Limited (VEIL), a closed-end investment trust managed by Dragon Capital and the biggest investment fund in Vietnam’s stock market, recorded negative growth during the period.

The fund’s performance was negative 3.61% in January. VEIL manages assets worth US$1.7 billion.

As of the end of January, VEIL’s biggest investments were in the banking sector, accounting for 27.13% of its investment value, followed by investments in real estate (26.43%) and food and beverage (10.17%). However all investing sectors had poor performance with banking and real estate sectors posting the biggest losses.

After gaining points in the first half of January, the stock market witnessed some strong corrections as profit booking dragged down the VN-Index. The profit taking was magnified by panic over margin calls.

The market benchmark VN-Index declined 4.28% in the first month of 2021.

Dragon Capital said that recently, the fund restructured its investment process with the number of target stocks cutting down to 28 – 32 from 35 – 40.

Finnish equity fund PYN Elite also witnessed is its net asset value (NAV) drop 5.39% in January, mostly due to losses in Vietnam Engine and Agricultural Machinery Corporation (VEA), Vietnam JSC Bank for Industry and Trade (CTG) and PetroVietnam Power Corporation (POW). It marked the worst performance of PYN Elite since 2017.

The fund manages total assets worth US$572 million.

In a letter to investors in February, Petri Deryng, portfolio manager of PYN Elite, said that Vietnam's stock market began 2021 on a negative note, but the prospects for the whole year are still very positive.

Vietnam’s economy, which has obtained some achievements, rising profits of listed companies and appealing stocks’ valuation are factors contributing to the bright prospects of the market.

The market saw strong fluctuations after the VN-Index surged quickly from 900 points to 1,200 points in just ten weeks.

During the turbulent month, PYN Elite used all of its resources to buy Vinhomes JSC (VHM) shares, making it the biggest investment of its portfolio. At the moment, VHM shares account for 9.82% of its portfolio, worth VND1.5 trillion.

Another investment fund posting negative performance in January was AFC Vietnam Fund, with growth of negative 1.9%.

The fund assessed the plunge of the market after rising over 20% in the fourth quarter of 2020 and gaining 8 percent in the first seven trading sessions of 2021 was a healthy movement. And reaching the 1,200 point level by the VN-Index was really attractive, luring new strong inflows to the market.

Top five investments of AFC Vietnam Fund were Agriculture Bank Insurance JSC (ABI), accounting for 8.1% of its investment value, LienVietPost Joint Stock Commercial Bank (LPB), Dinh Vu Port Investment and Development JSC (DVP), VNDirect Securities Corporation (VND) and Phu Tai JSC (PTB).

As of the end of January, the fund invested most in the financial sector (35% of its portfolio) and industrial sector (23.5%).