INSTITUTIONAL INVESTORS AND WEALTH MANAGERS PLAN TO INCREASE THEIR ALLOCATION TO VIETNAM AND FAVOUR ACTIVE STRATEGIES

(MENAFN- Perceptiona) The vast majority of pension fund managers, institutional investors and wealth managers plan to increase their exposure to Vietnam over the next three years, with the majority favouring active strategies over index-tracking vehicles. This is according to new research* from Dragon Capital, the investment manager to Vietnam Enterprise Investments Limited (VEIL), a Vietnam-focused investment company incorporated in 1995 with total NAV of £1.4bn.
One in twenty (5%) say their fund will invest in Vietnam for the first time. Almost all (99%) professional equity investors interviewed agree that frontier markets can offer attractive diversification benefits compared to emerging and developed markets, with over half (51%) strongly agreeing.
Mr Tuan Le, Lead Portfolio Manager of VEIL, said: "The appeal of investing in Vietnam is clear; it offers both returns and diversification. Over the past decade, we've seen the Vietnam Index rise by 199%, a stark contrast to the 78% rise in the MSCI EM index and 23% in the MSCI FM Index (in GBP terms).
“Vietnam continues to show strong forecasts. GDP doubled from £169bn in 2013 to £340bn in 2023, and is projected to grow by a further 6% in 2024. The country is also working towards being upgraded to both FTSE Russell and MSCI emerging market status, which will pave the way for billions of pounds to pour into Vietnam’s capital markets.”
In the Stock Market Development Strategy towards 2030, approved in 2023, the Government aims to achieve a market capitalisation of stocks equivalent to 120% of GDP by 2030, with current market capitalisation equal to 60% of GDP. This includes initiatives such as a new trading and settlement system, and the Prime Minister has instructed the State Bank of Vietnam, the Ministry of Planning and Investment, and the Ministry of Finance to make this upgrade a priority.
If emerging market accession was to happen, 88% of those surveyed said their fund would increase its allocation to Vietnam. Over half (55%) say they would dramatically increase their fund’s allocation and 7% said their fund would invest for the first time.
And if Vietnam was upgraded, 86% of professional investors say the fund they help manage would increase its allocation to Vietnam via actively managed investment funds or strategies. Some 12% said their fund would invest for the first time via these strategies.
Tuan Le continued, “Investor preference for active investment strategies brings more flexibility to their portfolio strategy and provides access to often undervalued stocks or ones with high levels of sustainable growth in sectors at the forefront of Vietnam’s economic growth. Vietnam’s combined market cap of £198bn and average liquidity often exceeding £750m is larger than many current ‘emerging markets’, creating ample investment opportunities.”
Table to show the comparison of the value of assets invested in index tracking investment funds/vehicles and actively managed investment funds/vehicles in Vietnam
Value of assets Percentage that are in index tracking investment funds/vehicles Percentage that are in actively managed investment funds/vehicles
Up to 25% 18% 10%
25% - 50% 67% 36%
50% and over 15% 54%

Dragon Capital’s study reveals a belief that frontier equity markets offer an ideal environment for active managers to outperform. All those surveyed agree with this view, with just over one in three (35%) strongly agreeing. The study, carried out amongst professional global and emerging market equity investors who collectively manage around £1.3 trillion AUM, reveals a preference for active strategies over index-tracking vehicles. Amongst those with exposure to Vietnam, over half (51%) have 50% or more of these assets in actively managed investment funds or vehicles. This compares to around one in seven (15%) who have between 50% and 75% of their assets in index tracking investment funds or vehicles.
About Dragon Capital
Founded in 1994, Dragon Capital is the largest and oldest Vietnam-focused fund manager with an AUM of £4.3bn. Established six years before the stock market was launched, the company has taken a pioneering role in building Vietnam’s financial infrastructure and capital markets. Dragon Capital offers international investors access to the Vietnamese capital markets via multiple investment vehicles including public equity funds, ETFs, and fixed income.

VEIL is a London-listed closed-end fund with total NAV of £1.4bn, it is a FTSE 250 constituent and the largest single-country investment vehicle on the LSE. It is actively managed and invests in sectors such as retail, technology, banks, materials and real estate.

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