The vast majority of pension fund managers, institutional investors and wealth managers plan to increase their exposure to Vietnam over the next three years.
This is according to new research from Dragon Capital, the investment manager to Vietnam Enterprise Investments Limited (VEIL).
Almost all respondents (96%) said the funds they help to manage will increase their exposure, while 42% said their exposure will increase dramatically.
One in twenty (5%) said their fund will invest in Vietnam for the first time.
Almost all (99%) professional equity investors interviewed agreed that frontier markets can offer attractive diversification benefits compared to emerging and developed markets, with over half (51%) strongly agreeing.
VEIL lead portfolio manager Tuan Le 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.”
If emerging market accession was to happen, 88% of those surveyed said their fund would increase its allocation to Vietnam.
Over half (55%) said 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 said the fund they help manage would increase its allocation to Vietnam via actively managed investment funds or strategies.
Overall, 12% said their fund would invest for the first time via these strategies.
Le added: “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.”
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