VEIL offers access to an exciting growth market…by Thomas McMahon




Vietnam Enterprise Investments (VEIL) is managed by the largest overseas investor in Vietnam, Dragon Capital, which has been investing in the country ever since its market reforms really started taking effect in the mid-1990s – even before the local stock market launched. This gives it a prominent position in the local investment community, and knowledge and experience of the market second to none.

VEIL has generated extremely attractive returns over the long run (see Performance). Returns have been well ahead of the benchmark Vietnamese index as the Dragon team, led by Dien Vu, have extracted significant levels of alpha.

However, VEIL took losses last year as Vietnam retrenched in the face of difficult macro conditions and some local political controversies. Dien has shifted slightly more defensively, focusing on the highest quality companies with the strongest balance sheets which he thinks will be able to do well in a slightly higher inflationary environment (see Portfolio).

Vietnamese equities have already bounced off their lows seen last November. However, Dien expects the market to remain subdued in the first half of 2023, as the impact of tightening liquidity and higher interest rates is felt, with the potential for stock picking to add value as stronger companies outperform.

However, he expects a pick-up in the second half of 2023 and a strong rebound in earnings in 2024, and notes that Vietnamese equities are currently very cheap by historic standards.

The long-run macro story for Vietnam is still very strong. The country is rapidly urbanising, with the government investing heavily in basic infrastructure to connect all parts of the country. It is attracting manufacturing from US, Chinese, and Taiwanese companies in search of cheap labour, and maintains good relations with both the US and China.

VEIL trades on a wide Discount of 17.1%, compared to a five-year average of 13.7%.


Analyst’s View


Vietnam is an exciting long-term growth market. The country is experiencing rapid GDP growth as it urbanises, attracts overseas investment and steadily opens up its stock market and economy to foreign investors. It also clearly brings risks, with political and economic volatility expressed in volatile stock market returns.

We think this means investors need to have a long-term view if they are going to invest. On that long-term view, the cheapness of the market after a difficult 2022 adds to the attractions, with VEIL’s double digit discount potentially adding to the return potential. We would also argue that Vietnam looks more attractive given the higher political tensions between the US and China. Vietnam can maintain links with both actors, and remains a key locus for manufacturing for global blue chips.

In our view Dien and the team at Dragon have expertise second to none given their long experience in the country and deep links to the corporate sector. The benefits of this have been seen in the significant alpha they have generated over the long run, with VEIL handsomely outperforming the local market. Dragon’s size and network in acquiring favourable structured deals and IPOs provides an extra, potentially exciting, source of returns.



  • Vietnam is an exciting structural growth story
  • Dragon Capital is the largest foreign investor in the country with connections and experience second to none
  • VEIL is trading on a double-digit discount, which could boost returns when market sentiment improves




  • High single stock risk which could hurt returns in certain circumstances
  • Single country funds bring currency risk and political risk, evidenced by recent fraud charges in Vietnam
  • High OCF (like the other specialist Vietnam trusts)

See the full research on Vietnam Enterprise Investments here >

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Disclosure – Non-Independent Marketing Communication
This is a non-independent marketing communication commissioned by Vietnam Enterprise Investments. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

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