Vietnamese asset manager VinaCapital estimates that total assets under management of local and foreign-domiciled exchange-traded funds tracking Vietnam will triple to around US$7.5 billion within five years, driven by growing foreign interest.
The Southeast Asian nation’s potential upgrade from frontier to emerging market will be an “even more substantial catalyst” that could generate “much larger inflows”, Thu Nguyen, VinaCapital’s head of investments, listed equities and fixed income, says in an interview with Asia Asset Management.
She expects index provider MSCI to upgrade Vietnam’s status within five years.
As of end-2024, nine local asset managers offered 16 ETFs with 24.6 trillion dong ($950 million) of total assets under management. There are also several foreign ETFs tracking Vietnam, including Fubon FTSE Vietnam ETF, VanEck Vietnam ETF and Xtrackers FTSE Vietnam Swap UCITS ETF.
Many of the foreign ETFs are far larger than Vietnam funds. But Nguyen believes local ETFs have strong growth potential, pointing to Vietnam’s 49% cap on foreign ownership of local securities and companies as a reason.
“With the foreign ownership limit rules in place, foreign investors realise that local ETFs are effective vehicles to invest in good local companies and gain exposure to the country’s capital markets,” she says.
According to Ngyuen, VinaCapital continuously analyses global trends to assess the viability of developing new ETFs, including active funds.
“The feasibility of launching active ETFs depends on a more-established regulatory framework, exchange infrastructure and domestic demand, as well as preferences,” she says. “At present, we are collaborating with relevant stakeholders and government agencies to develop several strategic beta ETFs that we expect to provide to investors in the coming months.”