The following extracts from our latest Annual Report provide additional information on the development of the VNH Fund and the environment in which it was accomplished.
In the fiscal year ended in June 2011, the Vietnam Index (VNI) declined by 14.7%, from 507.14 to 432.54. The USD-adjusted benchmark performance of the VNI for this period was 22.7%. By comparison, VNH’s net asset value per share decreased by 20.2%, from US$1.407 to US$1.122.
VNH’s investment portfolio reflects a disciplined, yet dynamic, asset allocation approach. Our views of prevailing global megatrends resulted in VNH initially allocating 20% of total assets each to the agriculture and domestic consumption sectors. These have since grown from 41% of total assets in June 2007 to 62.8% in June 2011. This increase in the two core portfolio allocations reflects the considerably higher performance of both sectors compared to the VNI benchmark. The performance of VNH’s underlying portfolio has been enhanced by our dynamic asset allocation process, which has resulted not only in portfolio shifts, but also in additions to our conviction portfolio. The most significant portfolio rotations were in response to drastic increases in Vietnam’s inflation rate and its impact on domestic spending patterns.
As noted above, VNH publishes monthly Investor Reports, which provide more detailed information on the portfolio and tracks VNH’s net asset value performance against its peers. In the entire four-year period since we produced these peer reviews, VNH has outperformed the benchmark VNI, other Vietnam country funds, and the index trackers, by a commendable margin.
The portfolio also increasingly reflects the sustainability research which is now closely tied to our historically strong financial analysis. The noted emphasis on Domestic Consumption and Agriculture is just one example. We additionally are using our growing base of ESG data and our active engagement with investee companies to further build assets which produce both shareholder value, and a better Vietnam.