Your ETFs can lag their indexes

Article Excerpt

The broad Vietnamese stock market, as measured by the FTSE Vietnam All Share Index, has done very well over the longer term, gaining 71% over the five years ending October 31, 2019. By comparison, the VanEck Vietnam ETF lost 3.1% over the same period. This is a large performance gap and requires some explanation. First, not all companies listed on the Ho Chi Minh Stock Exchange are available for investment by foreigners. Even those that are available have limitations on the percentage of shares that can be held by foreigners. The FTSE Vietnam Index, which only includes stocks that are available to foreign investors, has returned only 29% over the past five years as compared to the 71% for the full index. The second reason is that the FTSE index limits its individual stock holdings to 15% while the ETF caps each at 8% of the portfolio. The top three holdings in the FTSE Index and the ETF are currently the same…

You are trying to access subscriber-only content.

To read this article, you may subscribe or sign in.
If you are already a subscriber, log in here.

If you wish to become a subscriber, click here. Or you may enjoy access to all our publications when you become a Member of Pat McKeough's Inner Circle Pro.