This Single Country ETF Could Take You On A Wild Ride

“Recently, one of the countries I’ve been asked about the most is Vietnam. And I’m not surprised, last year the economy was still able to grow by more than 5%, even despite the global economic slowdown. And looking forward, Vietnam is expected to post higher than 8% growth in 2010 and near 8% growth in 2011. That has a lot of investors wondering about the Market Vectors Vietnam ETF (VNM). While clearly this is substantial economic growth that may very well lead to a very interesting long-term story, Vietnam presents few opportunities right now. In order for a country to be a good investment, the economic, political, and equity market must all be conducive and Vietnam fails on several of these fronts,” Robert Hsu Reports From Investor Place.

Hsu goes on to say, “One of the biggest problems with investing in Vietnam is that the nation runs a very big trade deficit. In fact, Vietnam recorded a $1.75 billion trade deficit in the first two months of 2010 — nearly 20% of the country’s total export turnover. This condition puts the country’s currency, the dong, under constant pressure. In fact, the State Bank of Vietnam has actually devalued the dong twice since November of 2009 — shredding the dong’s value by about 8.9% against the dollar.”

“Finally, Vietnam is a country with a very underdeveloped equity market. This market is thinly traded, and that means a big lack of liquidity. There also aren’t any prominent, pure-play Vietnamese companies listed in U.S. exchanges.  That means that the Market Vectors Vietnam ETF (VNM) has holdings that are mainly the thinly traded Vietnam stocks, giving you a basket of volatilize stocks that can take you for a roller-coaster ride,” Hsu Reports.

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Here are the details on the Market Vectors Vietnam ETF (VNM) below:

The fund (VNM) seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the Market Vectors Vietnam Index. The fund normally invests at least 80% total assets in securities that comprise the funds benchmark index. The Vietnam Index is comprised of companies with market capitalizations of greater than $150 million and stocks whose market capitalization falls below $75 million as of any rebalancing date will no longer be eligible for the Vietnam index. The fund is nondiversified.

Fund Holdings as of 3/23/2010
Number Holding Ticker Shares Market Value % of net assets
1 Baoviet Holdings BVH VN 4,826,920 $10,913,410.22 8.39%
2 HAGL JSC HAG VN 2,235,705 $9,827,019.67 7.55%
3 Viet Nam Construction and Import-Export JSC VCG VN 2,696,400 $7,665,374.16 5.89%
4 Kinh Bac City Development Share Holding Corp KBC VN 2,109,600 $6,711,258.81 5.16%
5 Jsc Bank For Foreign Trade VCB VN 2,638,660 $6,218,762.69 4.91%
6 CAPITALAND LTD CAPL SP 2,147,000 $6,224,531.02 4.78%
7 Petrovietnam Fertilizer & Chemical JSC DPM VN 3,546,980 $6,175,530.84 4.75%
8 OIL & NATURAL GAS CORP LTD ONGC IN 250,672 $5,895,792.25 4.53%
9 Talisman Energy Inc TLM CN 324,108 $5,477,433.16 4.21%
10 Vietnam Jsc Commercial Bank CTG VN 3,497,910 $5,351,793.14 4.11%
11 GS Engineering & Construction Corp 006360 KS 57,951 $5,179,872.40 4.00%
12 PetroVietnam Drilling and Well Services JSC PVD VN 1,442,356 $4,407,401.73 3.39%
13 PetroVietnam Finance JSC PVF VN 2,676,910 $4,083,136.02 3.14%
14 Petrovietnam Technical Servi PVS VN 2,249,600 $3,765,079.20 2.89%
15 Development Invest Construct DIG VN 1,006,721 $3,758,002.55 2.89%
16 Hoa Phat Group JSC HPG VN 1,105,750 $3,750,029.93 2.88%
17 Premier Oil PLC PMO LN 204,270 $3,625,402.84 2.79%
18 KEPPEL LAND LTD KPLD SP 1,227,000 $3,168,574.63 2.43%
19 Petrovietnam Construction Co PVX VN 2,239,300 $2,871,458.64 2.27%
20 Pha Lai Thermal Power JSC PPC VN 3,298,140 $2,937,048.89 2.26%
21 Charoen Pokphand Foods PCL CPF-R TB 5,996,100 $2,679,157.26 2.06%
22 Tan Tao Investment Industry Corp ITA VN 1,379,820 $2,650,333.22 2.04%
23 Soco International PLC SIA LN 92,932 $2,322,406.78 1.78%
24 GAMUDA BHD GAM MK 2,585,500 $2,208,190.69 1.70%
25 Saigon – Hanoi Commercial Joint Stock Bank SHB VN 1,749,100 $1,895,594.82 1.46%
26 Federated Premier Intermediate Municipal Income Fund FPT VN 422,710 $1,847,691.72 1.42%
27 PARKSON HOLDINGS BHD PKS MK 619,738 $1,093,844.57 0.84%
28 Vinacapital Vietnam Opportunity Fund Ltd VOF LN 585,508 $945,325.50 0.73%
29 SP SETIA BHD SPSB MK 717,500 $885,426.99 0.70%
30 Minor International PCL MINT-R TB 2,365,900 $845,468.16 0.65%
31 Raffles Education Corp Ltd RLS SP 28,000 $7,627.61 0.01%

Chart for Market Vectors Vietnam ETF (VNM)

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