Top 4 ETFs for Investing in Vietnam In 2017

As Vietnam continues to shift from a controlled economy to a market economy, it is joining the world marketplace. Its agricultural products have become a significant export, and it is attracting foreign investments.

Investors wanting exposure to Vietnam can buy exchange-traded funds (ETFs) that either focus on Vietnam or have some exposure there.

We have selected four funds that offer opportunities in Vietnam for investors in the United States. Because this is an emerging market, we focused on ETFs that pay dividends, so investors can gain income while waiting for capital appreciation.

If any of the emerging market securities in these ETFs decline, investors should weigh the loss of share value against the value of the dividend. It is also important to emphasize that emerging market funds can default on dividend payments if the underlying markets fail.

Here are how the four ETFs break down. All figures are current as of July 17, 2017.

1. VanEck Vectors Vietnam ETF (VNM

VNM is the closest thing to a pure Vietnam play an investor will find. The fund tracks the performance of the MVISä Vietnam Index.

Companies that are incorporated in Vietnam, generate half their income in Vietnam, or have half their assets in Vietnam qualify for inclusion in the fund. Managers attempt to keep at least 80% of the fund’s assets in securities that are in the underlying index.

Expenses are fairly high for the fund, and it is considered high risk.

  • Avg. Volume: 175,653
  • Net Assets: $305.18 million
  • Yield: 2.14%
  • YTD Return: 14.49%
  • Expense Ratio (net): 0.63%

2. Guggenheim Frontier Markets ETF (FRN

FRN seeks to replicate the BNY Mellon New Frontier Index. This ETF has 9% of its assets in Vietnamese enterprises, and invests in the ETF above, VNM, along with other frontier markets. The fund seeks emerging market enterprises that trade on the London Stock Exchange, New York Stock Exchange, NYSE Amex and Nasdaq.

FRN is suitable for investors who are interested in putting money in Vietnamese companies but also want exposure to other emerging markets.

  • Avg. Volume: 25,247
  • Net Assets: $67.45 million
  • Yield: 3.44%
  • YTD Return: 18.26%
  • Expense Ratio (net): 0.70%

3. Columbia Beyond BRICs ETF (BBRC

Emerging markets funds typically focus on Brazil, Russia, India and China. BBRC includes other markets, such as Vietnam.

It has a nearly 6% exposure to Vietnam. It tracks the FTSE Beyond BRICs Index, keeping at least 80% of its assets in companies that are in that index.

  • Avg. Volume: 7,436
  • Net Assets: $72.58 million
  • Yield: 2.29%
  • YTD Return: 16.90%
  • Expense Ratio (net): 0.58%

4. iShares MSCI Frontier 100 (FM

FM follows the MSCI Frontier Markets 100 Index, and aims to invest a minimum of 90% of its assets in securities from that index. It may also choose other securities that are similar to those in the index.

The focus is on frontier markets, and it has a 3.63% exposure to Vietnam. The fund seeks securities that are liquid and ranks its component companies by market capitalization.

  • Avg. Volume: 129,325
  • Net Assets: $605.83 million
  • Yield: 1.04%
  • YTD Return: 16.10%
  • Expense Ratio (net): 0.79%

Bottom Line

Emerging markets carry much risk, and the Vietnamese market is no exception. However, its economy is gaining strength, and investors who want to take on more risk for the chance to have higher returns may consider ETFs that have exposure to Vietnam.

The ETFs listed above would be most appropriate for an investor who has a wise asset allocation strategy and is disciplined enough to stick to it. In that context, investing in Vietnam could be a calculated risk if it is offset by some safer investments.

Read more: Top 4 ETFs for Investing in Vietnam In 2017 | Investopedia
Source from internet: here 



How to Invest in Vietnam

Vietnam bears many traits of a prime investment candidate – strong organic growth, a middle class that is both surging in size and wealth, and attractive labor costs. With last year’s signing of the Trans Pacific Partnership (TPP) and the EU Free Trade Agreement, Vietnam will see a massive trade expansion that will further fuel its growth.

These dynamics have awarded Vietnam the largest FDI inflow within its peer group, and the Ho Chi Minh stock exchange has evolved into one of the most dynamic in Asia. While these traits make Vietnam indisputably attractive, American investorsare hindered by a major roadblock – no Vietnamese stocks are trading on U.S. stock exchanges. However, we believe investors should not be dissuaded from such an attractive market. We outline some viable investment options for Vietnam below.

Ways to Invest in Vietnam


Emerging market ETFs are great ways to invest in Vietnam.

Emerging Market Mutual Funds

One option is to buy shares in an emerging or frontier market funds. Based in the United States, these funds invest in growing companies in such markets as Vietnam, Thailand, Poland, Costa Rica and Colombia. In most emerging and frontier market funds, investment in Vietnam is very small, usually less than 3% of invested funds. The bulk of investment is in other more accessible countries.

Exchange Traded Fund

Investors can also invest in an exchange-traded fund (ETF), with shares bought and sold much like shares of stock. Currently there is only one ETF devoted to Vietnamese investments, and it is mainly targeted at traders. The ETF is not fully committed to investing in Vietnam with about 30 percent of the fund invested outside of the country. Furthermore, this fund utilizes passive investing which could be undesirable to many investors who believe an active approach is more effective in a new market like Vietnam.

Vietnam Mutual Fund & U.S Broker

Currently there is no Vietnam mutual fund in the US. This actively managed fund would allow investors easy access and liquidity in the Vietnamese stock market. Investing with a U.S. stock broker can be challenging for multiple reasons. Specifically, there are no U.S. retail brokers who have direct access to the Vietnamese stock exchanges.

U.S. and local brokers also provide great ways to invest in Vietnam.

Local Vietnamese Broker

The most direct access would be with a local Vietnamese broker. Investors must go through the approval process prior to buying shares directly from the Vietnamese stock exchanges. Foreign investors need to file a registration form, an applicant information sheet and a background check for criminal activity with Vietnamese regulators. There are drawbacks to investing through a local brokerage. For example, Vietnamese brokerages provide very little monthly reporting. There are numerous risks associated with investing in Vietnam. A U.S.-based financial advisor with knowledge of market conditions and experience in Vietnam should be consulted.

Source from internet:  here