The growth briefly came to an abrupt halt during the Asian Financial Crisis in 1997, pushing the country to focus on macroeconomic stability rather than growth. Since then, the economy has grown to a gross domestic product (GDP) of $122.7 billion, stable credit rating, strong exports to the U.S., and modest public debt relative to its growth rates.
Investing in Vietnam with ETFs
The easiest way to invest in Vietnam is using exchange-traded funds (ETFs), which provide instant diversification in a single U.S.-traded security. With $268.2 million in assets under management and a modest net expense ratio of 0.76%, the Market Vectors Vietnam ETF (NYSE: VNM) is the most popular fund for investors looking for exposure to the country.
The Market Vectors Vietnam ETF offers exposure to publicly traded companies that are primarily domiciled and listed in Vietnam and/or generate at least 50% of their revenues from the country. As of December 2012, the fund held approximately 33 different companies consisting of 45.9% financials, 21.5% energy, and 10.6% industrials, among other sectors.
While this is one of the only ETFs offering exposure to Vietnam, investors should be aware that the fund is heavily weighted in financials (45.9%) and small cap stocks (47.1%).
Benefits & Risks of Investing in Vietnam
Vietnam's economy involves a number of different benefits and risks that international investors should carefully consider. While the country's rapid growth rates may attract investors, they should carefully consider the higher risk profile, government controls, and reliance on key industries to support that growth over the long-term.
