CSOP launches Vietnam ETF
CSOP Asset Management, one of the fastest-growing Hong Kong ETF issuers, has launched a plain vanilla Vietnam ETF.
The CSOP FTSE Vietnam 30 ETF (3004) tracks the FTSE Vietnam 30 Index.
The index is measures the performance of the 30 largest Vietnamese companies on the Ho Chi Minh Stock Exchange on a market weighted basis. A 10% cap is applied to the weights of the biggest stocks.
Reflecting the Vietnamese market, the fund gets one third of its weight from the real estate sector.
The fund charges 0.99%.
Bernie’s commentary – there’s a lot to say here
This may seem like something not worth covering but there is a lot of interesting stuff going on with this launch that’s worth highlighting.
First, Vietnam has had one of the best-performing stock markets in recent years. The country has been one of the biggest winners from the US trade war with China. Thanks to the trade war, US companies are looking for nearby alternatives with cheap labour, like Vietnam. This has helped Vietnam have Asia’s best performing share market the past five years.
Second, the Vietnamese stock market is named after Marxist revolutionary leader Ho Chi Min. I thought this was amusing. Its sort of like naming the London Stock Exchange after Jeremy Corbyn or Tony Benn.
Third, CSOP has been a bit of a silent horse in the Hong Kong ETF market. I was always told that launching ETFs in Hong Kong is a waste of time because the funds management industry is still run on that old-school trail commission system. The banks – which own the wealth management market – won’t give your ETFs shelf space unless you pay them. Yet CSOP has managed to make it work somehow. CSOP is majority owned by China Southern FM, one of the largest fund mainland fund managers.
Fourth, Premia Partners, an independent Hong Kong ETF shop, already has a Vietnam ETF that charges just 0.75%. Yet CSOP feels comfortable coming in at a 33% higher fee. CSOP clearly backs themselves – or doesn’t back Premia – to pull off an over-pricing manoeuvre like this.
Fifth, it’s hard to know who you’d sell a Vietnam ETF to. Institutional investors cannot spend any real time looking at a place like Vietnam because of the tiny role that it plays in major equity benchmarks. And institutional investors do not like drifting from benchmark. Meanwhile retail investors in Hong Kong prefer more volatile investments like warrants. But CSOP clearly knows something I don't.