01 · Stock selection criteria
What makes VNSHINE different?
In Vietnam's stock market, three issues are fairly common among listed companies: high accounting profits but weak actual cash dividends paid to shareholders; capital raised through new share issuance or high stock dividends; and expansion funded mainly by debt.
The three stock selection criteria of the VNSHINE Index are designed to limit these three issues.
VNSHINE constituents
Overall market (VNINDEX)
2025 data
COMMON ISSUE
High accounting profits, but limited actual cash payouts.
Prioritize cash dividends
Stocks are screened on cash dividends actually received, rather than accounting profits alone. Dividends received by the fund are reflected in its NAV.
Cash dividend payout ratio of constituents (share of profit paid out in cash)
The constituents' cash dividend payout ratio is 2.6 times that of the overall market, without sacrificing growth: companies continue to invest steadily.
COMMON ISSUE
Frequent share issuance and stock dividends that keep expanding charter capital.
Limit share dilution
Avoid companies that tend to dilute shareholders through new share issuance or high stock dividend ratios. Think of a company as a cake: as the number of shares grows, each shareholder's slice can shrink unless they contribute more capital. VNSHINE favors companies that keep the "cake" intact for existing shareholders.
Annual growth in shares outstanding
Shareholders in the overall market were diluted by as much as 15% in a single year, while VNSHINE stayed almost unchanged.
COMMON ISSUE
Expansion funded mainly by debt, with fairly high financial leverage.
Prioritize net debt reduction
Favor companies that keep reducing debt, easing future interest burdens.
Net debt / Equity (negative = net cash)
A negative value means the company holds more cash than debt. When interest rates rise or the economy slows, these companies are not first in line for interest pressure and have more room to sustain dividends and investment. The overall market sits to the right of zero (net debt); VNSHINE sits to the left (net cash).
International Shareholder Yield strategies usually treat share buybacks as one of their three core pillars, but buybacks are not yet common in Vietnam. VNSHINE therefore replaces this pillar with a "Limit share dilution" criterion designed specifically for the Vietnamese market.
Data source: FiinPro, compiled by PHFM, 2025 data; overall market = VNINDEX.
02 · Portfolio allocation
Far lower weight in Financials & Real Estate than the market
Many people assume that buying an ETF holding dozens of stocks means their risk is diversified. Yet in Vietnam, most market-cap-weighted indices concentrate heavily in two closely linked sectors, Banks and Real Estate, because much of bank lending flows into property projects. In 2022, when the real estate bond market hit a liquidity crisis, waves of forced margin selling sent both groups down together, and the VN-Index lost more than 43% of its value in less than a year. Many investors holding seemingly diversified portfolios still suffered heavy losses, because those portfolios were essentially concentrated in a single credit and real estate cycle.
VNSHINE's combined weight in Financials & Real Estate is only 40.8%, well below VN100 (72.6%) and VN30 (75.8%), reducing the portfolio's dependence on any single group of stocks.
Combined weight: Banks + Other financials + Real estate
Banks
Other financials (securities...)
Real estate
In a market-cap-weighted Vietnam ETF, financials and real estate typically make up more than 70%. VNSHINE holds just 40.8%, with real estate at only 2.5%. When the economic or interest rate cycle turns, the portfolio is not hit all at once. This is not a sector allocation target; it is the result of disciplined stock selection.
Sector allocation
Banks21.4%
Other financials16.9%
Consumer goods14.7%
Consumer services12.1%
Industrials11.8%
Technology9.3%
Utilities5.6%
Basic materials4.6%
Real estate2.5%
Oil & gas1.1%
The three highlighted groups, Banks + Other financials + Real estate, total 40.8%; even the largest sector, Banks, accounts for only 21.4%.
Top 10 holdings (30-stock portfolio)
MWG10.3%
Consumer services
The top 10 total 79.7%, spread across eight sectors with fairly even weights; no single stock dominates the portfolio.
Data source: HOSE, LSEG, compiled by PHFM, as of 30/10/2026. Actual figures: in 2023, 6 listed banks paid cash dividends; in 2024, 9 banks did; the rest mainly paid stock dividends to raise capital. Estimate: around 12 banks in 2025 (source: public market reports). Holdings and weights are adjusted at each periodic review; please refer to the company's latest disclosures for actual figures.
03 · Valuation
Why does the timing matter?
Relative to its own history, VNSHINE is trading at a rarely seen low valuation. The decline reflects market sentiment rather than weaker businesses: constituents' EPS continues to grow. The current P/E is 9.2x, just 57% of the 6-year average (16.1x). Against the overall market (P/E 11.2x), VNSHINE is about 18% cheaper, in line with its 2020 lows.
Today's valuation reflects market sentiment, not a change in company fundamentals.
Drivers of the correction
Margin deleveraging
Foreign net selling
High interest rates
VNSHINE P/E versus the past 6 years (SD = standard deviation)
−2SD
10.1
−1SD
13.1
6Y average
16.1
+1SD
19.1
+2SD
22.1
Now 9.2x
Valuation stands at 9.2x, just 57% of the 6-year average of 16.1x. This is below the −2 standard deviation mark (10.1x), cheaper than both the 2020 pandemic low and the 2022 bond crisis.
P/E relative to the overall market (VNSHINE ÷ VN-Index)
1.0x
at par with the market
Historical range 1.2–1.6x
(premium)
Now 0.82x
Over the past 6 years, thanks to its higher-quality portfolio, VNSHINE has typically traded at 1.2–1.6x the overall market's P/E. It is now just 0.82x (VN-Index P/E 11.2x), about 18% cheaper than the market and in line with its 2020 lows.
Next catalyst
Moving toward MSCI standards: opening the door wider to international capital
Regulators are working to improve market quality, with meeting MSCI standards as the next goal; FTSE's upgrade of Vietnam is a stepping stone on this path. As the market moves closer to international standards, it becomes easier for many large global funds to include Vietnam in their portfolios, which could attract more foreign capital.
International institutional investors buy selectively. They favor companies with transparent governance, healthy capital structures and stable cash flows. VNSHINE's three screening criteria, namely cash dividends, dilution and financial leverage, reflect exactly these factors.
Valuation data: FiinPro, PHFM estimates; P/E as of 30/10/2026, standard deviation bands based on the past 6 years of P/E. The valuation levels above reflect a specific point in time, do not constitute investment advice and do not represent future performance.