VNM: Pandemic Preparedness Fosters ETF Excellence | ETF Trends

Amid rising cases of COVID-19 around the world, Vietnam’s governmental response can serve as a paragon on how to handle a pandemic. The country has successfully been able to parry the economic effects of the virus, which bodes well for single-country ETFs like the VanEck Vectors Vietnam ETF (NYSEArca: VNM).

“Thanks to its strong fundamentals, and assuming the relative control of the COVID-19 pandemic both in Vietnam and the world, the Vietnamese economy should rebound in 2021,” a World Bank report said. “COVID-19 has also shown the necessity for stronger reforms to help the economy recover in the medium term, such as improving business environment, promoting the digital economy, and enhancing public investment effectiveness and efficiency, which are some of the key agendas for Vietnam to consider stronger and faster reform actions.”

VNM seeks to replicate as closely as possible the price and yield performance of the MVIS® Vietnam Index. A company is generally considered to be a Vietnamese company if it is incorporated in Vietnam or is incorporated outside of Vietnam but has at least 50% of its revenues/related assets in Vietnam.

VNM offers investors:

  • The Nation’s First ETF Focused Exclusively on Vietnam: Among the world’s most populous nations; roughly 40% of the population is under the age of 25
  • One-Trade Access to Local Market: Approximately 70% of Index market cap currently represents locally-listed Vietnamese companies
  • A Convenient Way to Customize International Exposure: Companies must be incorporated in, or derive at least 50% of total revenues from Vietnam to be added to the index

The fund’s next expense ratio comes in at 0.66% while the fund is up 6.50% this year.

VNM Chart

A Strong Pandemic Response

Vietnam’s economy, like the rest of the world, still faces some uncertainties amid the pandemic. Nonetheless, the country’s strong response has been able to stymie a recession in a challenging 2020.

“A strong response to the coronavirus pandemic, surging exports and healthy public spending have helped Vietnam buck a global recession in 2020 and fast-track its recovery, with analysts predicting it will likely enjoy one of the highest growth rates in the world,” a Jakarta Post article said. “But the pain is not over for some sectors with containment measures and border disruptions hammering the country’s tourism industry, and leaving the once-booming aviation sector limping.”

“While many countries have suffered from high infection and mortality rates, Vietnam has recorded fewer than 1,500 coronavirus cases and 35 deaths thanks to mass quarantines, expansive contact-tracing and strict controls on movement, allowing factories to largely stay open and people to swiftly get back to work,” the article added.

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