The Investor's Bookshelf: A veteran CIO reveals how to win in Vietnam

If you want to be a successful investor, you need to possess one key ingredient: curiosity. That’s what Andy Ho, CIO of Vietnamese investment manager VinaCapital, believes.

“Investing to me is more than delivering a return on money. It’s about learning – I get to learn new things every day,” Ho told AsianInvestor.

“If you’re not a curious person and you don’t have a huge appetite for learning continuously, then investing is really not for you,” he said.

“You will be lazy and won’t study the company, the technology, the business model – and then you won’t do well. So, the desire to learn is what drives me to engage in investing. Investing is just a way to prove that what I learnt and what I can apply are correct.”

He should know. As a veteran investor himself and lead portfolio manager of the $1.1 billion VinaCapital Vietnam Opportunity Fund, Ho has a highly successful track record in managing money in an emerging/frontier market that is not particularly easy to invest - Vietnam.

The Vietnam Opportunity Fund is closed-ended investment company and a FTSE-250 constituent whose shares are traded on the main market of the London Stock Exchange.

The fund invests growth equity in listed, private equity and state-owned enterprise assets in Vietnam.

The fund's net asset value per share has gained 58.9% in total returns on a cumulative basis in US dollar terms over a five-year period.

Ho is also the individual award winner for Best CIO of AsianInvestor's Asset Management Awards 2024, which were announced recently.

In addition, he is co-author of Crossing the Street:  How to make a success of investing in Vietnam published in 2021.

The book, written with his colleague at VinaCapital, Joel Weiden, serves up 23 rules derived from the experience of investing in Vietnam.

Ho is candid when he says there were mistakes along the way, yet more importantly, some valuable lessons were learnt from those mistakes.

Vietnam presents a significant opportunity for investors in Southeast Asia. Yet, as with any frontier market, investing is not simple or easy.

Investing in this fast-growing and exciting country can be rather like the infamous experience of attempting to cross its busy streets. To get to the other side in one piece takes nerves and experience.

The book is a candid, actionable guide to investing in Vietnam, written by an investor with almost two decades of experience in navigating the challenges involved – and seeing people safely across to the rewards.

The motivation for writing the book was to keep a record of what Ho and Weiden went through as investors so that it could help others navigate carefully around similar solutions.

In a conversation with AsianInvestor, Ho offered some nuggets of wisdom about investing in emerging and frontier markets, which are also mentioned in his book.

Consider the dynamics of a business when deciding to invest

In Vietnam, often the good opportunities lie in investing in a family business – the husband is the strategic leader tasked with thinking ahead, while the wife is usually the chief financial officer managing the cash and daily operations.

“This is a very typical set-up of an Asian family business,” said Ho.

“The last thing an investor wants in this instance is a problem in the family, and in the worst case, a marriage split or divorce. The focus on the business gets distracted and then investors have to worry about what happens to their money when the business is split up between the couple,” he said.

It’s important for investors to be mindful of such situations because there can be issues with their investments in the family business later.

Think carefully before building things from scratch

Investors tend to underestimate the challenges of building things in emerging and frontier markets – which can prove costly in the long run. Case in point: Ho’s team once took over a hotel under construction that was set to be a three-star hotel.

“We were ambitious and tried to transform it into a five-star hotel. And it became very, very costly.

"Our lesson was that maybe we shouldn’t be building hotels and that it’s probably better to take over a five-star hotel and refurbish it,” he said.

Building a hospital in an emerging or frontier market poses similar challenges, he noted.

“People think it should be cheap because labour and material costs are relatively low. But those costs can add up pretty quickly- so people need to be mindful of what they decide to do.

Document everything

Investing successfully in Vietnam requires investors to get everything documented.

“If you operate in frontier or emerging markets, ensure all your agreements are fully documented to avoid any misunderstandings later,” noted Ho.

Ensure everyone’s interests are aligned

This is a crucial element of investing in markets like Vietnam – always ensure the interests of the investor are aligned with those of the company, the sponsors, owners and other shareholders.

Even though there are agreements in place, it’s often easy to blame economic conditions, political conditions, etc to break an investment contract, said Ho.

“So rather than simply go by what is written, you need to align your interests with the owner and main stakeholders in a way that if they feel happy, you feel happy too.

"Equally, if you feel the pain, the stakeholders feel it too. One way of doing that is by not investing in a subsidiary – only invest in the holding company,” he said.