2014 was a strong year for the AFC Asia Frontier Fund (AAFF) as a young team came together to establish a platform for future growth. This was not only reflected in the fund’s performance, but also in our focus on making on-the-ground visits to countries, meeting more companies, talking to people in our markets, and tracking developments in our investment universe on a pro-active basis. Strong fund performance comes from the right stock selection, but that would not be possible without the aforementioned points. Good performance during the year also saw an increase in our assets under management and we are committed to give our best for investors going forward.
In terms of performance, AAFF returned 23.8% net of fees and outperformed our closest benchmark, the MSCI Frontier Markets Asia Index, which was up 12.2% in 2014. The MSCI Frontier Markets Asia Index consists of stocks from Bangladesh, Pakistan, Sri Lanka, and Vietnam, and we believe that this is our closest benchmark, as these four countries make up 68% of AFC’s fund as of December 2014 and historically these four countries have been a majority of the portfolio.
Source: MSCI, Asia Frontier Capital
The other major index within the frontier markets space is the MSCI Frontier Markets Index, which was up 2.9% for the year and consists of global frontier countries, including the likes of Kuwait and Nigeria. This index lost a large part of its return in the last quarter of 2014 as Kuwait and Nigeria, both crude oil exporters, account for close to 40% of the index and both countries were negatively affected by slumping crude prices.
Breaking down 2014 performance country wise, on a gross return basis, the leading return contributors within fund were Pakistan, Vietnam, Bangladesh, and Sri Lanka, in that order. The countries which were a drag on performance and had a negative return contribution were Mongolia, Iraq, Myanmar (Singapore listed plays on Myanmar), Papua New Guinea, and Cambodia in that order. The negative contributors did not have a very significant impact on fund performance, as the fund is not heavily concentrated in any one country which provides a balance when a few countries impact performance negatively.
The reason that these countries were negative contributors is because most of these countries are dependent on commodity exports, which are being impacted by lower commodity prices. Iraq also had to contend with the additional challenge of the ISIS conflict which impacted the country’s economy. Our approach of diversifying our investments and not having a concentrated position in any one country reflects our top down approach to managing risk, which has proved successful thus far.
The fund manages risk by diversifying assets across countries, but performance has purely been generated by stock selection. Within our top performing countries, it is specific stock ideas which led to outperformance of the respective markets. Elaborating further on this, the stocks which we overweighted for the fund are the ones which delivered positive performance and this reflects the point made earlier that it is stock selection that generated our strong returns in 2014.
The top five return-generating stock ideas in 2014 were (in order of contribution to gross return): a pharmaceutical company from Pakistan, a consumer beverage company from Pakistan, a tobacco company from Pakistan, a pharmaceutical company from Bangladesh, and a consumer-focused conglomerate from Sri Lanka. All of these five companies were part of our top 20 holdings during the year except for the Pakistani tobacco company, which we exited and booked profit on in the beginning of 2Q2014.
Not surprisingly, the stocks which did not perform well for the fund were energy/commodity related or were part of a country that was negatively impacted by lower commodity prices or certain events (i.e. Iraq). The bottom five return contributors (in order of contribution to gross return) were a consumer beverage company from Iraq, a Myanmar focused energy play listed in Singapore, a concrete company from Mongolia, an energy company from Pakistan, and a junior mining company focused on Mongolia.
An observation which we would also like to bring up is that the best performing stocks in 2014 were from sectors which the fund is over weight on i.e. consumer staples, consumer discretionary, and healthcare. This ties in with our belief that the fund universe has favourable demographics in the form of a young population, rising GDP/capita, increasing literacy levels, and further country reform which will be beneficial for the populations of these countries and will have a positive impact on consumption.
Another observation to discuss is the difference between the fund’s holdings and that of its closest benchmark, the MSCI Frontier Markets Asia Index. This index is primarily made up of large cap. names across the four markets of Bangladesh, Pakistan, Sri Lanka, and Vietnam. As mentioned earlier, the fund’s performance has been generated by stock selection as we are not benchmark-constrained, and this allows us to look at ideas which are not necessarily the large cap names for those respective countries but at the same time are well established companies, can provide longer term returns, and are fundamentally sound. A majority of the top performers for the fund in 2014 are not part of the relevant benchmark. The fund’s sector focus is significantly different from that of its benchmark, as the majority of the investments are made in the consumer staples, consumer discretionary, and healthcare sector. The table below shows the fund’s sector weight against that of its benchmark.
This ability to try and find ideas outside of the benchmark has enabled us to find companies on which there is not much research coverage, which we believe to be an advantage. To add to that, even the larger names within our universe are still under-researched compared to many emerging market peers, providing an opportunity to find both value and growth ideas.
Source: MCSI, Asia Frontier Capital
Overall, the fund’s 2014 performance was satisfying and the team undertook research trips, found new ideas, and managed macro events on a proactive basis. We believe that going forward it is this pro-active approach of meeting more companies, doing more research trips, and keeping our ears to the ground which will keep the fund in good stead. A lesson from 2014 was “Don’t Panic”. Macro events, both locally and globally, will continue to happen but our idea is to invest in companies which can benefit from a longer term trend and not from a few poor quarters. If we believe that these companies will be around for the next decade and even beyond, then any panic situation should be used to buy good companies.
Our View for 2015
On a macro basis, the biggest event over the past few months which can have an impact on our key markets is the drop in the price of crude oil. Brent crude oil prices were down 46% in 2014 and have also started 2015 on a weak note. If weak prices continue for the better part of the year, this will have an impact on a majority of the fund’s portfolio.
As mentioned in the November 2014 newsletter, markets such as Bangladesh, Pakistan, Sri Lanka, and Mongolia are net importers of crude oil, as it accounts for 14-26% of these countries’ total imports. Lower crude prices will be beneficial for these countries’ current account deficits and foreign exchange reserves and will help central banks manage monetary policy as inflation has already dropped across key markets of the fund. One net energy exporter within the fund universe is Iraq, which will see a negative impact on government revenues but has built up sizeable foreign reserves of USD 70 billion+ which should help the government manage the situation in the near term. Our largest country by holding, Vietnam, also depends to some extent on crude oil exports (~5% of exports) but it also imports refined petroleum products as there is a lack of refining capacity in the economy. The drop in crude prices should have a relatively neutral impact on the economy. More importantly, lower crude prices have led to lower inflation and fuel prices in Vietnam and this will be beneficial to the economy on a micro/company level.
- Overall, lower crude prices are beneficial for a large part of our fund universe on both a macro and company specific level. For example:
- Domestic fuel prices have already been cut in Pakistan, Sri Lanka, and Vietnam which is a positive for consumer disposable income.
- Electricity prices have been cut in Pakistan and Sri Lanka for industrial users.
- Domestic consumer gas prices have been cut in Bangladesh, which is a positive for consumer disposable income.
- Inflation is at much lower levels in our fund universe.
- There is a possibility of interest rate cuts in markets like Pakistan.
- Lower domestic fuel prices are a positive for consumers which can have a positive impact especially on consumer discretionary stocks.
- Lower fuel and electricity prices will reduce input costs for manufacturing-related industries and therefore is a positive margin impact for cyclical stocks.
- Other commodities such as metals and coal have also been weak. This should also positively impact sectors that depend on them as key inputs and therefore this can have a positive margin impact on cyclical stocks as well.
- As mentioned earlier, managing the macro such as current account deficit and foreign exchange should be easier for oil dependant economies.
Lower crude prices can be a positive for the portfolio both on a macro and company specific basis as the fund is well positioned in the consumer and cyclical sector. Having said that, the fund could look to increase its exposure to consumer staples, consumer discretionary, and cyclical companies to take advantage of this trend of lower crude and commodity prices.
Outlook for Key Markets
The beginning of 2014 witnessed political protests due to the election period, but things have stabilised since then. We continue to like Bangladesh as we think it provides a good consumer story with a population of close to 160 million and a GDP/capita of USD 1,100. As future income levels rise, we think consumer companies in the country will benefit and therefore we like the long term story of consumer related stocks in Bangladesh. We think lower crude oil prices will be a positive for the economy and also for consumer stocks in general. On a macro level, the country has done well relative to peers such as Pakistan and Sri Lanka as it has managed to have a current account surplus through increased exports, kept its fiscal deficit under control (3.4% of GDP), and has not built up high levels of government debt (35% of GDP). Political protests can be an issue going forward but these events have occurred in the past as well and companies have continued to deliver numbers. Valuations are not cheap in Bangladesh and we will need to be selective in our investments.
The country can benefit from higher wages in China but its textile/garment industry is still being developed and has been hampered by protests. Being a smaller country in terms of population and size, its economy is still not as diverse as neighbouring countries such as Thailand and Vietnam. Tourism has done well for Cambodia and is a sector that we think will continue to grow due to the attraction of Cambodia as a tourist destination, receiving about 4 million tourists a year, up from about 1 million a decade ago. There are currently two stocks listed on the Cambodia Securities Exchange, but our exposure to Cambodia is through a gaming play listed in Hong Kong and is a way for the fund to get exposure to the growth in tourism in the country. We remain positive on the long term potential for tourism in the country.
The country has been in the news for all the wrong reasons in 2014. The country no doubt has massive oil reserves which will hold it in good stead in the long run, but in the near term the worry will be ISIS and lower crude prices. We think the conflict with ISIS has seen its peak as its spread caused enough of a worry with the US and NATO that they stepped in. We think the battle between ISIS and pro-Iraqi forces will continue in the coming months but the positive aspect of this issue is that a new government has been appointed and the Iraqi central government and the Kurdish government seem to have resolved their differences. Therefore from a political standpoint, the situation in 2015 should look better. From an economic standpoint, besides the impact of ISIS, lower crude prices will be negative for the economy but with the country having sizeable foreign reserves, the government should be able to manage. In sum, 2015 can be positive politically and economically one can expect a slower year due to the impact of ISIS and lower crude prices.
The government had stepped up its expenditure over the past few years but with falling commodity prices and a rising current account deficit, the government will probably need to keep a check on its plans as current account deficit is at about 25% of GDP and fiscal deficit has increased to 5% of GDP from 1% in 2012. Slower government spending could impact growth this year. There are four stocks listed on the Laos Securities Exchange and the fund holds two of them, a power producer and a bank, which both have decent dividend yields of 6.7% and 10.1% respectively. Having said that, we will be re-assessing our view on these stocks in 2015.
Our exposure to Maldives is via two tourism-related companies listed in Sri Lanka that generate a large part of their revenue from the Maldives. The Maldivian economy is very dependent on tourism and continues to be an attractive tourist destination in Asia.
The country has disappointed in 2014 as the government continues to drag its feet on getting its act together with respect to foreign investment. The issue with Rio Tinto, as well as bearish commodity prices, have led to foreign investment and exports slowing down and this has impacted the macro metrics for Mongolia with current account deficit at 14% of GDP and fiscal deficit at 10-11%. As a result, the Mongolian Tugrik lost about 14% in 2014. Though the picture in 2014 was not very rosy, any positive steps by the government as well as a recovery in commodity prices could lead to a positive outcome for the economy. Whether that will happen, time will tell, but the fund is well positioned in the country in the event of a rally.
The fund has a few investments in Myanmar through Singapore-listed entities, but it is still early days for the economy. We continue to look for Myanmar-focused opportunities listed in overseas exchanges. The country is an attractive opportunity with a population of 51 million, GDP/capita of around USD 1,200 and a GDP of USD 65 billion, as well as access to natural resources. If all goes to plan, a stock exchange is expected to open towards the end of 2015 which should be a positive for the country.
The country was a key contributor to outperformance for the fund in 2014. The macro situation has been unstable over the past few years but there is some evidence of change, with the government committing to certain economic reforms as it has received funds from the IMF. The government has reduced its equity in certain state companies to raise funds and is also in the process of reducing subsidies, which can help manage the fiscal deficit. More importantly, the government has taken steps to improve the security situation but this would take a more long term commitment as this issue will not be eased in a matter of months. The macro and security issues have existed historically but certain companies have continued to show sound fundamentals while P/E ratios for the KSE-100 index have been between 8-11x over the past three years, a discount to most frontier markets which reflects that valuations capture some of the macro and security issues. Going forward, the economy will benefit from lower crude prices and any economic reform and improvement in the security situation will be incrementally positive. We think consumer discretionary and consumer staple companies can benefit from increasing disposable incomes due to a drop in fuel prices while cement and textile companies can benefit in the form of lower input prices.
Papua New Guinea
The development of the USD 19 billion Exxon-Mobil LNG project had a positive impact on the country’s economy but with its completion in 2013, growth rates for the economy have eased but could see a pick-up in 2015 as the country begins to export LNG shipments. Further, since the country also depends on commodity exports, the economy is facing some negative impact. The outlook for the country will hinge on the price outlook for commodity prices and exports of LNG.
The recent Presidential election in January 2015 saw a new President come to power. Maithripala Sirisena, the new President, was Health Minister in the Mahinda Rajapaksa government and defected to the opposition in November 2014. The prior government was possibly very top heavy and there was talk of Mahinda Rajapaksa and his family members dominating important decision making. The new President is expected to have a more balanced approach especially towards foreign policy as the prior government had tilted heavily in favour of China. In his manifesto, the new President has alluded to reviewing tax breaks for certain projects as well the viability of certain mega projects and we shall see what he does regarding those. The new President appears committed to continued economic growth and development post the end of the war in 2009, but we think the market will watch his moves with respect to economic policies. We plan to visit Sri Lanka this year to assess the impact of the new government.
Though there could be short term uncertainty over the new government, the outlook remains positive for Sri Lanka. The country continues to develop from the end of the war in 2009, is pushing further infrastructure development, and, like its South Asian neighbours, will benefit from lower crude prices in 2015. Tourism is a sector which holds lot of potential as Sri Lanka still only gets about 1.6 million tourists compared to other emerging Asian destinations like Vietnam and Cambodia which get about 7.6 million and 4 million tourists respectively. As the tourism infrastructure in the country develops, we would not be surprised to see tourist inflows reach the levels of its peers. We think consumer, infrastructure, and tourism companies are attractive in Sri Lanka.
The country continues to recover from the real estate induced economic slowdown of 2011-12 as GDP is expected to grow by 6% in 2014 and 2015 compared to 2013. Though issues still remain in the banking sector with respect to non-performing loans, economic activity has been showing signs of picking up over the past few quarters with industrial activity growing by 7.6% in 2014 compared to 5.9% in 2013. With economic growth recovering, we think the country will continue to provide attractive investment opportunities across sectors such as consumer, infrastructure, and manufacturing and we are on the lookout for new investment opportunities in the country. The country continues to develop as an upcoming export destination with exports touching USD 150 billion in 2014. Lower wages is what is driving manufacturers to set up base in Vietnam especially due to rising wage levels in China. As a result, conglomerates such as Samsung, Intel and Microsoft all have set up manufacturing bases in the country. We are positive on the economy as it offers a sizeable population of 90 million which is educated and is seeing a rise in income levels. One negative that we see on a broader macro basis is the government involvement across the economic spectrum but this is a historic issue and will probably take time to evolve but that does not take our eye away from the opportunity that Vietnam offers.
In conclusion, Asian frontier markets continue to be under-researched by the investor community relative to their emerging market peers and this will continue to provide opportunities to find new ideas and further explore existing investment theses. Besides being under-researched, Asian frontier markets offer a sound macro story in terms of favourable demographics, rising income levels, greater literacy, labour force growth, natural resources, and country-specific political and social reform which provides a platform for future growth. Another trend which can drive future growth in Asian Frontier economies is low cost wages in countries such as Bangladesh and Vietnam which are driving more manufacturing activity to these markets as wage levels increase in China. This trend will can further help reform infrastructure and generate employment leading to rising income and economic growth.
Valuation wise, Asian frontier markets continue to offer value on both a stock specific and overall market basis. We continue to hold certain consumer as well as non-consumer related companies which trade at a discount to emerging market peers, even though multiples for some consumer related companies have gone up over the past year. We are also watching our companies whose P/E multiples are expanding to make sure that expansion in multiples is being backed up by earnings growth or expected to be backed up by earning growth.
To wrap up, we will continue to take advantage of this favourable trend impacting our country universe as well as continue to invest in new ideas that have the ability to provide returns to investors. Given the nature of these markets, there could be short term bottlenecks at times, but we believe in taking a longer term view in investing in these markets.
Below is a quick look at key macro metrics based on IMF estimates. Given the drop in crude oil prices, we expect these will change with respect to the 2015 growth outlook once IMF releases its next global economy outlook report in April 2015.
Let it never be said that 2014 was an uneventful year for Vietnam. From diplomatic disputes with China to the equitization of state owned companies to a huge market rally that ended with a significant correction at the end of the year.
Despite this tumultuous time, it is with great pleasure that we announce that the AFC Vietnam Fund was the most successful Vietnam Fund vehicle in the world in 2014 in its very first year of operation. The AFC Vietnam Fund has now returned +35.6% since inception on December 23, 2013 which represents a gain of +50.2% for CHF based investors and +52.8% for EUR based investors.
Looking back to when the fund launched at the end of 2013, we were just at the beginning of an economic recovery in Vietnam, with a stable currency and the first attempts to implement a solution to the non-performing loan issue which was a result of the crisis between 2007 and 2012. Inflation was expected to stabilize at around 7%, allowing the export industry an even trade balance and the currency to remain relatively stable. At the time the consensus estimates of the financial analyst community was that earnings growth should be around 12%, and the stock market was expected to achieve a 25% to 30% overall return.
Back in the present, we now see that the only correct forecast was that the currency remained steady to depreciate only around 1% against the USD. Against most other major currencies, including the EUR and the CHF, the VND significantly strengthened in 2014. Inflation has been revised lower, month by month and should be at a yearly average of around 4%, due to the collapse in the oil price. The trade balance, thanks to strong industrial and agricultural exports, should also be positive by more than one per cent of GDP. The banking sector is also recovering slowly as there was a much faster than anticipated recovery in the real estate sector which is stimulating the sector. Equally gratifying was the strength of the service sector which contributed to almost half of the economic growth – a very positive signal indeed for a developing country. On the negative side, the earnings growth of 3% to 4% was significantly weaker than the 12% forecast at the beginning of the year.
With an improvement of the economic situation, most market participants would have expected much higher gains in 2014. Earnings revisions, territorial disputes with China in the South China Sea, Ukraine, Russia and the fall in oil prices are the key words, describing the weak stock market performance since the end of March. The moderate increase amounted to +9.0% in 2014 for Ho Chi Minh (+7.9% in USD terms and +6.2% since fund inception).
Given all these events, we are quite satisfied with the AFC Vietnam Fund’s performance during the past year. Our strategy of capturing the revaluation of undervalued small- and mid-cap stocks, has worked out perfectly well. As you can see from the blue bar (net 2014) in the chart above there was a minimal market increase for the whole year 2014. You could almost describe it as a very boring year, compared to the annual change since the stock market began 15 years ago.
There were 2 key events in 2014 which rocked the market. The first one was the oil rig incident on the Parcel Islands between China and Vietnam. This ongoing territorial dispute in the South China Sea doesn’t seem like it will be solved very soon but we don’t think that it is in either of the party’s interest to escalate this situation to a broader conflict. The other incident was the recent decline in oil prices, but we are of the opinion that declining oil prices are helping rather than hurting Vietnam’s economy, especially given the current shortage of refining capacity.
The recent market correction is providing great buying opportunities and overall we remain very positive for this year. Negotiations for the TPP and EU free trade agreements are at advanced stages and their signing in the coming weeks or months could provide a nice catalyst for a flourishing stock market. Economic fundamentals still look attractive with record low December 2014 inflation of 1.8% (year on year), mainly due to the sharp fall in oil prices, and an economic growth this year which should continue to accelerate above 6 per cent.
During the course of the year we experienced quite a few sector rotations within the Vietnamese equity universe. One of the industries we were invested early and that increasingly came into focus was the fish / seafood sector, which was completely neglected in 2013. Sao Ta Foods, which is one of our holdings, is a typical example of such a “discovery”.
Source: Viet Capital Securities
With strong earnings improvements over the past two years and an earnings valuation of around 8x, this stock more than doubled in the first nine months of 2014. In such circumstances, where positive news get the overhand and lead to exaggerations, we reduced our position. But since the fundamentals of the company are still intact, we took advantage of the recent correction and added to our position again.
With macroeconomics mostly improving over the past year and a very stable outlook for 2015, we see even a higher potential for Vietnam now than 12 months ago. The correction over the last few months should be seen as the first cycle of a new bull market which has still years to go.
Source: Bloomberg – The Ho Chi Minh Index still has plenty of room to climb in a bull market
Looking forward for investors deciding how to play the Vietnamese bull market there are several options available but we, of course, believe strongly that well positioned active managers will outperform passive strategies in the coming years.
Looking at the alternatives to our fund there is a general misconception by some investors that exchange traded funds (ETF) are always passive and track an index. In recent years there has been a growth in the number of active ETFs; however, in Vietnam the situation is very unique. ETFs typically have large assets under management and are all passively managed. They all face the problem that they can only invest in liquid stocks or large caps where the foreign investor limit is not yet full. This issue restricts their investment universe to only a few stocks and hence limits their diversification level. ETFs suffered from this constrain the last couple of years, where the Ho Chi Minh index went up 20% in 2013 and 9% in 2014, ETFs have hardly moved during that time.
It is also worth mentioning the strengths of investing in an open-end fund versus some of the other structures. A key difference between a closed-end and an open-end fund is that the number of outstanding shares of an open-end fund can vary, whereas shares of a closed-end fund are fixed in number. An open-end fund will issue new shares, or repurchase old shares, as needed to meet investor demand, depending on whether money is being added to the fund or shares are being redeemed.
The per share price is determined by the net value of all assets (NAV) held by the fund, divided by the number of shares. The per share price of a closed-end fund however, is determined by the level of demand and offer and it therefore can either have a premium or a discount to NAV. For example in Vietnam, where closed end funds typically trade at a deep discount to NAV, open-end funds are by far the most popular among typical investors.
With an open-end fund, you can participate in the markets and have a great deal of flexibility regarding how and when you purchase shares. Also, you are never required to purchase shares at a premium or sell at a discount. Open-end fund managers have the flexibility to switch into cash in times of uncertainty or change their strategy to overweight more defensive stocks.
Looking back at 2014 here’s how the closed and open ended funds investing in Vietnam stacked up:
Source: EurekaHedge – as of end November 2014
When speaking to investors we often hear positive remarks about our high average dividend yield (6.1%) which is certainly attractive, but given that we are a value investor, our aim is to achieve long-term capital appreciation for investors by capturing value in growth companies; especially in the small to medium-sized company segment. In other words, the high dividend yields are rather the result of selecting undervalued companies with good earnings than using dividend yield as investment criteria. At the moment we still have a strong focus on smaller to medium sized companies since we believe that is where currently value is, given they are often undervalued and hence have a great potential to re-price. Currently, small caps trade at around 50 per cent discount to large caps. We already see this valuation gap narrowing for some time and we believe that over the next few years small caps will trade from currently “undervalued” to “neutral” and eventually to “overvalued” when retail investors are jumping to the bandwagon later in this rally. We see that happening all over the world throughout the history of stock markets and we definitely think that the Vietnamese mentality perfectly fits that thought. During that time of revaluation we will slowly but surely switch to large caps which tend to be the better bet during the latter part of a bull market.
Frontier market retail investor watches the trading screen
There are several factors why we believe that the Vietnamese stock market remains attractive. Given the current low inflation, we believe that the SBV (State Bank of Vietnam) will have further room to cut interest rates. The impact on lower interest rates is not to underestimate, a 1% cut in loan rates would trigger the GDP to increase by almost 0.5%. We mentioned before that Vietnam is expected to sign the TPP and the EU FTA, but there are also some other very important FTA’s (Free Trade Agreements) soon ready to be signed, such as ASEAN (AFTA), ASEAN-China (ACFTA), Viet Nam-Customs Union of Russia, Belarus, and Kazakhstan Free Trade Agreement and ASEAN-Korea (AKFTA) which all will help the economy to flourish.
In principle we do agree with the view of the World Bank and the Asian Development Bank which both raised their forecasts for Vietnam’s economic growth in 2015 end of last year. Our views stem mainly from improved consumer confidence and more favorable economic conditions and a sustained macroeconomic stability and last but not least the progressive expansion in the country’s, foreign invested, manufacturing exports sector.
Source: Asian Briefing
The recent strength of the US Dollar and the very stable exchange rate of the Vietnamese Dong certainly brought up some discussion about disadvantages for the Vietnamese export industry and a possible devaluation. But with a history and bad experience of high inflation and a weak currency just a few years ago the government is committed now to a relatively stable currency which is also lowering input prices and give foreign investors – which are the main reason for the recent improvement of the economy – a stable environment for long term decisions on investing in the country.
Main competitors in the region like China, Thailand, or Cambodia also have currencies which were relatively stable to the US Dollar and countries with weak currencies like Japan are not really playing on the same field of production. Furthermore, investments in the infrastructure sector, for example, are gaining on value in their home currency for these countries.
In closing, we see 2015 holding great opportunity for Vietnam and look forward to continuing to build on our performance in the coming year. If you are currently invested in Vietnam through ETFs or other passive strategies, we would encourage you to rethink this approach for 2015 and consider joining the AFC Vietnam Fund for another year of boutique fund returns.