Funds
Fund Performance
At a glance
- VEIL’s NAV rose by 2.3% in December, outperforming the VN Index (VNI) by 1.4%.
- The fund ended the year up 12.2%, exceeding the VNI by 3.4% and narrowing the 3-year performance gap.
- December was marked by heightened volatility, driven in part by local sentiment weakening under pressure from the strengthening DXY.
Performance
Fund Commentary
Despite encouraging news flow of domestic macroeconomic developments, local investors remained cautious in December, largely due to external factors. Concerns emerged around rising US government bond yields and a strengthening US Dollar Index (DXY), which could challenge the State Bank of Vietnam’s accommodative monetary policy. This cautious sentiment contributed to a subdued end to the year, with a risk-off approach prevailing throughout the fourth quarter and average daily turnover gradually decreasing towards the holiday period.
As we enter 2025, attention is shifting to 4Q24 earnings results. Following two years of disappointing earnings growth, expectations are high for a rebound in 2024, with double-digit growth projected. Dragon Capital’s Top 80 coverage universe delivered 19.0% YoY growth in the first nine months of the year, placing full-year growth on track to end in the high teens. We believe a solid 4Q24 earnings season could refocus investor attention on the domestic market, where Vietnam’s growth profile remains compelling and valuations undemanding heading into 2025.
Amid short-term market challenges, we are encouraged to see longer-term opportunities emerging from the government’s renewed focus on fiscal spending and infrastructure investment. The newly restructured administration has demonstrated a clear commitment to streamlining processes and accelerating project disbursements, making infrastructure a central pillar of its ambitious 8-10% GDP growth target for 2025. These initiatives align with our strategic emphasis on companies which are directly positioned to benefit from these developments, including technology, retail consumption, and industrial materials, while driving a strong recovery in the real estate market.
Stock in Focus: FPT Corporation (FPT)
FPT has consistently stood out in 2024, earning the title of our ‘Stock of the Year’. Founded in 1988, FPT has become Vietnam’s most exciting technology name, with a market capitalisation of $8.5bn. The company has steadily climbed the value chain in software outsourcing, securing contracts with Fortune 500 companies while maintaining engineer costs 20% lower than Indian competitors. This competitive edge is supported by FPT University, which provides a steady stream of well-trained engineers and has become a lucrative segment, growing 20-30% annually.
FPT’s telecom business, despite slower single-digit growth, continues to generate stable cash flow, enabling the company to invest in new technology ventures for future growth. Over the past three years, FPT has accelerated investments in semiconductor manufacturing, AI, and data centres, with its AI and data centre developments benefiting from a strategic partnership with NVIDIA.
Financially, FPT has delivered an average 20% EPS growth over the past five years and is on track to achieve similar growth in 2024 and 2025. A consistent outperformer in the stock market, FPT shares have beaten the VN Index by at least 30% over the past three years, continuing this trend in 2024 with a share price increase of 76.2%, compared to the VNI’s 8.8% gain.
