ETF fund says about incident of $276m cash holding

The computers of Van Eck Global, ETF VNM fund management company, posted the wrong data in the fund’s investment portfolio in many countries.

It was reported that ETF Market Vectors Vietnam (VNM) Fund suddenly posted a holding of over $276 million dong cash in its investment portfolio till March 18, bringing the fund’s total scale to more than $555 million. When looking at this data, many investors thought that the fund has raised new capital.

However, till 10:00 pm Vietnamese time on March 21, when updating the fund’s portfolio till March 18 on the website vaneck.com (the VNM Fund Management Co), ETF VNM fund’s portfolio was only $279.29 million worth stock portfolio and -$1.627 million worth cash, the fund’s cash holding of more than $276 million was evaporated.

Talking with NDHMoney on March 22, Dr Le Anh Tuan, chief economist-research director of Dragon Capital said, after hearing about the ETF VNM fund’s cash holding equaling to the fund’s net asset value (NAV), he immediately thought that there was likely a mistake here because ETF could not hold so much cash as it relates to the efficiency of investment.

Tuan said in the night March 21, Dragon Capital spoke with representative from Van Eck Global, the Market Vectors Vietnam Fund Management Co, and knew ETF VNM fund’s holding of such amount of cash was not correct. The figure showed a failure of Van Eck Global computer. This error occurred in the fund’s portfolio not only in Vietnam but also in many other countries.

Tuan advised Vietnamese investors should not be so respected the ETF’s investment portfolio because many stocks in this portfolio was purchased at the high price.

According to Tuan, currently the stock in the ETF fund’s portfolio has the P/E at 18-19.5 times while the P/E of the Vietnam stock market is only from 9-10 times.

Furthermore, 1-2 ETF managers have to monitor 4-6 ETF in many different markets, so they themselves can not cover and understand all the stocks held by the fund.

According to the view of Tuan, some ETF funds have purchased many stocks that have low liquidity, therefore when ETF fund want to sell these stocks, the liquidity risks may occur and the investors will hardly to sell the stocks.

Tags: Vietnam companies