Vietnam’s Opportunities and Challenges

Christopher Johnson: Welcome to Morningstar. Today, I’m joined by Ngo Thanh Thao, Co-Portfolio Manager of the Vietnam Enterprise Investment Trust (VEIL). Let’s dive in. Over one year, your investment trust achieved a 0.9% return rate underperforming its peer benchmark. What do you put this down to?

Ngo Thanh Thao: We have a quite positive return in the first two months of 2024 with the NAV increase by more than 3%. However, our one-year return is still impacted by some lags in last year’s 2023. As you may consider, 2023 was a tough year not only for Vietnam but also in terms of global economy. So, with the Fed rising rate, the geopolitics tension, and also the weakening in domestic demand has also impacted the business performance of the companies in Vietnam. Therefore, some sectors like, especially the retail sectors, have seen a very tough condition last year due to the slowdown in the consumption demand. Our two key holdings in this sector are Mobile World and PNJ has faced a slowdown last year and the share price was underperforming the benchmark. This mainly explains the 0.9% underperformance of the fund.

However, we do believe that the earnings of these two companies and also the retail sector will rebound in 2024, firstly, due to the low base effect for last year and secondly, it’s also driven by the growth in the consumption and also the increase in the public investment in Vietnam. Currently now, the interest rate in Vietnam is low, even, lower than the pre-COVID level. So, with the low interest rate in the environment and also with the strong determination of the Vietnam government to deliver the economic growth this year, we think the retail sector will recover.

CJ: You mentioned Mobile World and it makes up 4.67% of the trust. So why are you still backing the retail chain? You mentioned that it hasn’t done as well. So why are you still bullish on this stock?

NTT: Mobile World is our top pick in the retail sector. It is the best-in-class management and also leading in the retail transformation in Vietnam. So, after suffering a difficult year in 2023, as I already explained, the company expects to come back strongly this year. Profit will jump hugely and of course it will continue to recover in 2025 and also see a huge jump. The robust business performance is thanks to,

13 Questions for JPMorgan’s Jonathan Ingram

In this series of short profiles, we ask leading fund managers to defend their investment strategies, reveal the biggest risks to the bull market, tell us their unpopular investment opinions, discuss what they’d never buy, and recount the best piece of advice they’ve ever been given.

This week our interviewee is Jonathan Ingram, portfolio manager of JPMorgan European Discovery Trust (JEDT).

Describe Your Investment Strategy

Our bottom up strategy relies on understanding the relative benefits of, and then utilising, the very best insights from both fundamental and quantitative perspectives. I have always struggled with the market view that managers are either fundamental or quantitative. Fortunately we sit within J.P. Morgan Asset Management who have world class teams in both disciplines, and so understanding how and when to combine those inputs is really what has defined the strategies we have run over the last 20 years or so.

What are the Biggest Investment Opportunities in 2024?

Small cap stocks around the world are trading at discounts to large cap stocks that have rarely been seen before. Taking European data, the level of discounts that small cap stocks trade at are levels last seen in 2003 and then 2009 which, with hindsight, were two particularly good times to invest into the asset class.

What are the Biggest Risks to the Current Bull Market?

Geopolitical instability is currently at the front of a lot of people’s minds, and it looks plausible that this could become more challenging before we begin to see things improve. Outside of this, interest rates, that stay high for a long time, will likely cause some sort of economic slowdown.

Who is the Most Inspiring Person You’ve Worked With and Why?

In 2003, I was working within the currency team at J.P. Morgan Asset Management and attended an internal presentation by the CIO of European equities, Chris Complin. Pretty much there and then, I applied to join his team and have been here ever since. What inspired me most was his willingness to challenge every single aspect of a traditional fund management set-up in search of outperformance, not being afraid to borrow ideas from academia or other industries, from behavioural finance to game theory.

What, if Any, Investments Would Fit Into the ‘Buy and Hold Forever’ Category?

Having a robust sell discipline is just as important as effective idea generation of buy ideas. The success of any investment is ultimately

Vietnam: The Next Asian Superpower?

Christopher Johnson: Welcome to Morningstar. Today, I’m joined by Ngo Thanh Thao, Deputy Portfolio Manager of the Vietnam Enterprise Investment Trust (VEIL). Let’s dive in. Over one year, your investment trust achieved a 0.9% return rate underperforming its peer benchmark. What do you put this down to?

Ngo Thanh Thao: We have a quite positive return in the first two months of 2024 with the NAV increase by more than 3%. However, our one-year return is still impacted by some lags in last year’s 2023. As you may consider, 2023 was a tough year not only for Vietnam but also in terms of global economy. So, with the Fed rising rate, the geopolitics tension, and also the weakening in domestic demand has also impacted the business performance of the companies in Vietnam. Therefore, some sectors like, especially the retail sectors, have seen a very tough condition last year due to the slowdown in the consumption demand. Our two key holdings in this sector are Mobile World and PNJ has faced a slowdown last year and the share price was underperforming the benchmark. This mainly explains the 0.9% underperformance of the fund.

However, we do believe that the earnings of these two companies and also the retail sector will rebound in 2024, firstly, due to the low base effect for last year and secondly, it’s also driven by the growth in the consumption and also the increase in the public investment in Vietnam. Currently now, the interest rate in Vietnam is low, even, lower than the pre-COVID level. So, with the low interest rate in the environment and also with the strong determination of the Vietnam government to deliver the economic growth this year, we think the retail sector will recover.

CJ: You mentioned Mobile World and it makes up 4.67% of the trust. So why are you still backing the retail chain? You mentioned that it hasn’t done as well. So why are you still bullish on this stock?

NTT: Mobile World is our top pick in the retail sector. It is the best-in-class management and also leading in the retail transformation in Vietnam. So, after suffering a difficult year in 2023, as I already explained, the company expects to come back strongly this year. Profit will jump hugely and of course it will continue to recover in 2025 and also see a huge jump. The robust business performance is thanks