China +1 strategy gives our Vietnam fund a boost
Mario Timpanaro from Aquis Capital and portfolio manager of the Lumen Vietnam Fund knows the Vietnamese market inside and out. In this interview, he provides insight into the fund’s portfolio allocation and explains why Vietnam is an attractive investment opportunity for investors.
Mario Timpanaro:
"Vietnam’s growth has averaged 6.8 percent in recent years; the country could be reclassified as an emerging market by 2025."
Mr. Timpanaro, why should investors pay special attention to the Vietnamese market?
Mario Timpanaro: Among Vietnam’s over 100 million inhabitants, there are many well-educated people who work hard and are eager to improve their standard of living. 95 percent of the population is literate. The solid education of the people makes the difference compared to other economies.
Vietnam has developed very well in recent years. Initially a beneficiary of supply chain shifts, it now benefits from geopolitical developments, especially from the “China +1” strategy that many Western companies have adopted. Vietnam’s “bamboo diplomacy” – its skillful balancing between vastly different partners – is enormously beneficial to its economy. The country is politically very stable, has a very low debt-to-GDP ratio of 40 percent, operates with low inflation, and has a strong currency in the Dong.
Which sectors have performed particularly well in recent years?
Timpanaro: Vietnam’s growth has averaged 6.8 percent in recent years. We expect the country to be reclassified from a frontier to an emerging market by 2025. We value the very low correlation with EuroStoxx, S&P 500, and other major indices.
Allocation is extremely important; we allocate the capital of our fund – which, by the way, is the largest UCITS fund focused on Vietnam worldwide – with foresight. We focus on the financial sector, which we weight at 25 percent, real estate and industrial parks, non-cyclical consumer goods like dairy products, industry, and communication. We value stable returns and sustainable, long-term growth, which is also driven by upward demographic trends. We remain opportunistic to respond to emerging opportunities at any time.
What do you avoid investing in?
Timpanaro: Many emerging market funds, for example, contain cement manufacturers – but that does not align with our ESG criteria. We also sold all our positions in the manufacturing sector two years ago due to weakening global demand.
What risks exist – for example, how does Vietnam fare in terms of infrastructure, which is so important for the development of economies?
Timpanaro: The government strongly supports infrastructure projects. Whether it’s airports, seaports, or rail connections – there is rapid development happening everywhere. While the north, close to China, is already well developed, the focus is now on the south. A completely new major airport is being built 40 kilometers east of Ho Chi Minh City. The first construction phase, with a cost of USD 5.2 billion, is scheduled for completion in 2025.
To what extent is Vietnam’s economic upswing reflected in the Lumen Vietnam Fund?
Timpanaro: The historical performance of the Lumen Vietnam Fund was 26 percent in 2020, 49.6 percent in 2021, -29 percent in 2022, and 20 percent in 2023. The average annual historical return is 9.74 percent. Our investors have done very well in recent years with their investments in the quality portfolio of our Vietnam fund.
Source: https://www.private-banking-magazin.de/die-china--1-strategie-gibt-unserem-vietnam-fonds-den-turbo/
