VinaCapital’s Eric Levinson: Entering the New Year with Ardour and Assiduity
VinaCapital is one of the leading asset and investment management firms in Vietnam, raising money from both international and domestic investors and deploying it exclusively in Vietnam, offering a range of products including mutual funds, ETFs and managed accounts, and across asset classes including listed equities, fixed income, real estate, private equity, and venture capital. The firm is long-established for Vietnam, dating back to 2003 when it first listed its VinaCapital Vietnam Opportunity Fund in London, a closed-ended, multi-asset strategy investing in listed and private equities and which in 2018 hit a NAV of over USD1 billion. And in 2020, VinaCapital achieved over USD3 billion in total AUM. Hubbis ‘met’ with Eric Levinson by video link; since April 2020, he has been Head of Business Development at the firm, which is based in Ho Chi Minh City. We learned of the firm’s key products and of its mission to attract more of the rising domestic wealth into active and passive investments in Vietnam, and the drive to attract more international money into Vietnam’s economy, which despite the headwinds of the pandemic managed to register 2.9% GDP growth in 2020. And we heard how VinaCapital is tailoring its products and sales to clients, listening carefully to their evolving needs.
“We bring Vietnam to the world, that is our big mission,” Levinson said at the start of the discussion. “And as part of that, domestic investment opportunities to the rising ranks of domestic investors, including the banks, which are increasingly focusing on wealth management and investments. To achieve this, we offer a diversified platform of public equities and fixed income, private equity, venture capital, real estate, and also clean energy and infrastructure, with dedicated teams for each.”
A robust platform
After seventeen years in operation, VinaCapital has built a deserved reputation from its core offerings of open-ended funds, which are domiciled in Vietnam, its open-ended UCITS-compliant fund VVF which is domiciled out of Luxembourg, and the London Stock Exchange-listed FTSE 250 flagship VinaCapital Vietnam Opportunity Fund (LN:VOF), which features investments in listed and private equities, and is the only Vietnam-focused fund to pay a dividend. The firm also offers co-investments and managed accounts for private equity and real estate, primarily for international institutional clients.
Levinson joined VinaCapital in April 2020 and has quickly made the transition, energised by the opportunities afforded by a dynamic frontier economy that is heading towards emerging market status and growing exponentially in many areas.
Private wealth creation
“The demand for private wealth services in Vietnam is expanding faster than solutions are being created,” he reports, “so what I see here in Vietnam is that there’s tremendous demand for both solutions outside the traditional banking products as well as demand for advice on how to manage the growing volume of private wealth.”
As he looks ahead to the next five-year period, he sees these factors continuing and predicts that there will be a significant increase in the number of firms in the wealth and advisory sector. “The domestic banks will lead the way, with the more determined of them already taking steps to serve the demand and others finding their way into the market,” he reports.
Evolving investor demand
Levinson said that the traditional channels for investment for most Vietnamese have been real estate and gold, but that today there are increasing numbers of investors buying into securities, especially equities.
“Moreover,” he explains, “they increasingly realise that they do not have the time or expertise to research these investments and are better off hiring professionals to do this for them. The adoption rate of mutual funds, which are now much more accessible, has therefore increased as more people understand what they are and how they work.”
As positive as can be…
He adds that as Vietnam had thus far handled the pandemic effectively; estimates are that the country will achieve 2.9% GDP growth in 2020. Vietnam’s stock market closed up more than 15% in USD terms for 2020, having staged a massive recovery after the March sell-off. “All in all,” Levinson reports, “there is a positive mood despite the pandemic and more interest in equity solutions today than there was at the beginning of 2020, and that goes both for domestic investors as well as international investors.”
A classic Asia story
Levinson is enthused about the opportunity for international investors. “It is quite simple really,” he says.
“If you look broadly at Asia, Vietnam is still one of the countries with the best growth rates, one of the few countries in the world to register positive GDP growth in 2020, and the demographics are remarkable, with some 100 million people of whom two-thirds under 35. On top of that, Vietnam has also been one of the real beneficiaries of the US-China trade conflict, resulting in huge FDI inflows and the acceleration of the re-location of manufacturing from China that started a few years ago.”
The story is, therefore, a classic Southeast Asia growth scenario, and with the massive and rapidly growing population, the domestic economy is growing apace. Rapidly rising incomes and a mushrooming middle class have led to sharply rising levels of domestic consumption as well as savings available for investments.
“Investors outside Vietnam have seen what's happened in China, in Korea, Taiwan, Thailand, Indonesia and so forth, so clearly Vietnam is that next Asian ‘tiger’ economy,” he reports. “And although the equity market rose 15% in 2020, it remains at cheaper entry levels that the rest of ASEAN.”
Levinson reports that VinaCapital’s business continues to achieve good traction, with positive net inflows to the firm’s overall AUM, and that they are continuing to sign up new bank partners as they ramp up their wealth management offerings. He comments that Vietnam is not immune to the global reduction in interest rates and that in the past, one of the biggest challenges for asset managers historically has been that bank deposit rates were so high that it was difficult to attract money away from deposits or equivalent. But the benchmark interest rate is 4% whereas in 2011/12 it was 15%.
“So,” he extrapolates, “we see that all of a sudden, investors who had traditionally just been in bank deposits are now looking at far lower yields, and that opens the door to products such as fixed income funds, perhaps balanced funds, or an equity fund. More banks realise they have enjoyed a lot of success with bancassurance and that by offering more mutual funds, they can continue to keep assets, that mutual funds won't cannibalise their deposit bases, and will in fact actually help them attract and retain more assets. The net result is that naturally there will be more banks offering wealth management solutions in 2021 and beyond. It is happening even faster than we might have earlier predicted.”
The growth in private wealth is taking place across the board, as well, from UHNW and HNW clients to the retail market and the growing ranks of mass affluent in between. “Today,” Levinson reports, “we see a growing economy with a nearly 40% urbanisation rate, so aside from manufacturing, there is a rapidly expanding service economy comprising all facets of activity, from retail to healthcare, education and so forth. It is a very exciting time to be here to witness and participate in this dynamic country.”
As to priorities for 2021, Levinson reports that VinaCapital’s core priorities is to drive the growth of the domestic wealth management business, which means it will continue to partner with local banks, to continue to educate banks and investors on the benefits of investing, and to improve the understanding of the capital markets and products and tools, as well as investment theories and time perspectives. “A key priority for us is to educate and train not just our clients, but also our potential partners in the market.”
And internationally, VinaCapital has both a UCITs fund, the Luxembourg-domiciled VVF, and a Cayman-domiciled feeder called the Vietnam Access Fund (VAF), as well as an ETF that launched in 2020, the VinaCapital VN100 ETF. “A second core mission is to expand and better leverage our relationships with private banks in Asia and beyond, ” he reports. “We're therefore going to be spending a lot of time working with sophisticated or professional investors in Asia, whether they are private banks, securities platforms or family offices. In short, with any wealth management firm wanting exposure to Vietnam. That access can come through the funds, or the ETF, through a segregated account, or customised solutions that meet the objectives of these partners and the clients they serve.”
Levinson went on to explain that the firm will be making sure its clients and partners truly appreciate why they are heading to Vietnam. “It is part of our mission to make sure they understand not only the ‘Why Vietnam’ big picture, but also the ‘Why VinaCapital’, in other words what makes us unique,” he reports.
And the third key mission ahead is to expand its alternatives platform, which was historically centred on VinaCapital’s principal investments but has expanded to include co-investors and partners. “The success we have had with our principal investments over the past 15 years has led to growing interest from outside investors, so we are aiming to provide additional vehicles in which they can participate alongside us in unique investment opportunities that fall outside of the mandates of our traditional products,” he explains.
Levinson notes that there are still plentiful opportunities in real estate, where the firm has been a very prominent developer and investor, as well as in private equity and venture capital, where VinaCapital has built a long track record of successful investments as one of the most experienced VC investors in Vietnam. “We also have a nascent clean energy and infrastructure platform,” he reports. “VinaCapital’s expertise is squarely Vietnam and as a small-but-growing country, there are considerable advantages from the synergies of operating across multiple asset classes.” He further explains that ”We are now able to offer an extensive variety of interesting opportunities to overseas strategic and financial partners and investors, that no other firm in the market is able to do so.”
Zooming in on the clients
Levinson closes the discussion by noting that VinaCapital is a very client-centric organisation and will be making renewed and more extensive efforts at reaching out to clients and partners, both current and prospective, to make sure the firm fully understands their needs so that they can target solutions that are highly relevant to them.
“What we will bring through to fruition in 2021 and beyond will be directly based on the needs and expectations of our clients and partners, across the different segments, and both domestic and international,” he reports. “While we might not have the most products and solutions, what we will have will be solutions that truly address the clients we have and those we hope to work with.”
Getting Personal with Eric Levinson
Levinson has over 25 years of experience in asset management and wealth management, and before joining VinaCapital held senior roles in management, sales, and strategy as a Managing Director at AllianceBernstein, Hartford Funds and New York Life. He earned a BA from Occidental College in Diplomacy & World Affairs, with a Minor in Asian Studies.
“I was actually born in Spain,” he explains, “but moved to the US when I was just one and grew up outside of Boston and was educated after high school in Los Angeles. Over the course of my working life, a common theme is that I have worked with professional investors to help them solve problems on behalf of their clients and raised billions of dollars working for asset managers across the world. Vietnam was a natural landing spot for me at this stage in my career, and it has been an exciting journey thus far – it’s just such a fantastic opportunity.”
Levinson is a self-professed soccer fan, even though he is American. “I am a huge Manchester United fan,” he reports. “I love watching Premier League games from the UK, which thankfully are so widely broadcast across Asia.”
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