Vietnam Enterprise Investments - Mind the gap – it may close soon

Vietnam Enterprise Investments (VEIL) is the UK’s largest and oldest listed Vietnamese equities closed-end fund. Despite Vietnam’s bright economic outlook, Vietnamese equities were hit hard in 2022 by a toxic mix of unwelcome domestic and global developments, creating a disconnect between Vietnam’s favourable economic fundamentals and equity valuations. VEIL underperformed over this period due to its quality growth bias, as investors fled to defensive sectors, but the fund has consistently achieved its objectives of capital growth and outperformance on a rolling three-year basis and over the longer term. VEIL’s managers are confident 2023 will be a better year, both for the market and for the trust. They expect government initiatives to be effective in addressing domestic market issues, while the State Bank of Vietnam’s recent rate cuts and easing guidance should sooth investors’ rate hike jitters. If the managers are correct, the gap between Vietnam’s growth prospects and low equity valuations should begin to close, and VEIL’s performance should recover accordingly.