Van Eck Associates has just launched the Market Vectors Vietnam ETF (VNM).
The fund is benchmarked to the Market Vectors Vietnam Index, which is comprised of 28 stocks in 8 different sectors. Industry sectors with the largest representation inside VNM include financials (37 percent), energy (19 percent) and basic materials (12 percent).
Currently, approximately 70 percent of the market capitalization of the Vietnam Index is composed of securities of companies domiciled and primarily listed on an exchange in Vietnam and which generate at least 50 percent of revenues from Vietnam. This percentage is expected to increase in the future.
Despite turbulent global financial markets, Vietnam’s economy grew 6.5 percent in 2008. Vietnam has been capturing more share of foreign capital investment, which accounts for almost 40 percent of the country’s GDP. The International Monetary Fund has forecast 5 percent investment growth for this year.
VNM’s underlying index may also include non-Vietnamese companies that generate, or are expected to generate, at least 50 percent of their revenues from Vietnam, or that demonstrate a significant or dominant position in the Vietnamese market and are expected to grow.
Some of Van Eck’s largest ETFs in terms of assets are the Market Vectors Gold Miners ETF (GDX) and the Market Vectors Russia ETF (RSX). According to the prospectus, VNM’s annual expense ratio is 0.99 percent after its cap on expenses is calculated. The cap is due to expire in May 1, 2010. Call and put options on the Vietnam fund are not yet available but are expected to list in the near future.