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Vietnamese stocks are charging ahead – what to buy
Vietnam has been upgraded from a frontier to an emerging market. It remains a promising pick, says David Prosser
Vietnam ended the year by posting one of the world’s best stock market returns, with its VN index up 38%. But if 2025 was exceptional for investors, 2026 could provide the icing on the cake. September should mark a coming-of-age moment, with index provider FTSE Russell upgrading Vietnam from frontier to emerging market status. That will prompt a further wave of interest in Vietnamese equities, including from passive funds adjusting their emerging-market weightings.
It has taken 20 years to get here, says Qian Zhang, an investment specialist at Baillie Gifford. “Vietnam is now one of the best structural growth stories in emerging markets,” she says. “It’s still a lesser-known and off-index market and we remain selective, but the opportunity... is broadening for long-term, patient investors.”
Vietnam shares some of the fundamental structural drivers that favour many emerging markets, including its young population. But Zhang points to three additional attractions. “The country has spent two decades integrating itself into global supply chains through high-volume, cost-efficient manufacturing,” she explains. “A bold pro-growth policy shift under the new leadership is reigniting domestic economic momentum, and a fast-growing middle class is catalysing a shift from informal to formal consumption.”
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A tough deal from president Donald Trump on “Liberation Day” might have been expected to hit Vietnam hard. The country’s trade surplus with the US has expanded significantly since the first Trump administration, with Vietnam benefiting from the president’s efforts to force the world to rely less on China. However, a deal announced in July saw US tariffs on Vietnam more than halved; in any case, point out Vietnam bulls, the economic story in the country is much broader than the narrative around exports.
“Government reforms aim to accelerate GDP growth to enable Vietnam to achieve high-income status primarily through empowering the private sector and levelling the playing field,” says Conor Finn of Barclays Bank. “Surging infrastructure spending is the most tangible example yet of the effect of the reforms.” Investment was up 43% in 2025.
Three Vietnamese trusts for investors
There will inevitably be bumps along the way (not least given the erratic nature of US trade policy, with April’s Liberation Day prompting a sharp sell-off of Vietnamese shares), but the long-term outlook is alluring, adds Thomas McMahon, an investment analyst at Kepler Partners. “Vietnam is one of the most exciting emerging markets in the world.”
Traditionally, overseas investors have struggled to secure exposure to Vietnamese equities, with tough regulation on trading in the country and limits on non-Vietnamese ownership of some companies. However, investors now have a choice of three UK-listed investment trusts that specialise in Vietnam.
“All three of these funds have strong... records and have each outperformed the MSCI Vietnam index and the FTSE Vietnam index over the past five years,” says Alex Trett, an investment-trust research analyst at Winterflood Securities. The biggest of the three, the £1.37 billion Vietnam Enterprise Investments Limited (LSE: VEIL), is currently trying to address the wide discount at which its shares have traded relative to the value of the fund’s underlying assets in recent times. Under proposals announced earlier this month, investors will be able to cash in 30% of their shares – through three separate 10% tender offers over this year – at close to net asset value (NAV), rather than at the 13% discount prior to the proposals.
“Given returns of close to 60% since April’s lows, I wonder if shareholders will want to lock in some profits or to take a longer-term view,” says Andrius Makin, associate portfolio director at the stockbroker Killik. But, he adds, “the longer-term investment case for Vietnam is still very much intact”. Anthony Leatham, an investment trust analyst at Peel Hunt, points out that the board of Vietnam Enterprise has already made good progress on the discount, which stood well above 20% a year ago, before a series of share buybacks. “We see these proposals as providing an additional driver for further discount narrowing.”
The second-biggest fund in the sector, the £750 million VinaCapital Vietnam Opportunity Fund (LSE: VOF), has also sought to reassure investors worried about discounts. It runs regular share buyback programmes aimed at managing the discount.
The third option is the much smaller Vietnam Holding trust (LSE: VNH), which has a market value of £76 million. It has posted the strongest share-price performance of the trio over the past five years and has also run regular share-buyback programmes. Unlike VEIL, which sticks to listed equities, the other two trusts also dabble in private equity.
This attention to governance and value for shareholders is important, because even small shifts in sentiment towards Vietnam can result in trusts’ discounts widening, leaving investors vulnerable. That said, the closed-ended structure of investment trusts also provides useful protection in an illiquid market. Killik’s Andrius Makin believes that despite the strong performance of the Vietnam stock market last year, all three trusts are currently attractively valued. “All three are positioned to capitalise on the growth of the domestic Vietnamese economy, which is set to benefit from a young population and the growth of the middle class, driven by increasing urbanisation,” he says. “Investors should expect to see big allocations to sectors that provide exposure to this theme, mainly real estate, financials and retail stocks.”
Readers interested in learning more about Vietnam can see Andrew interviewing Thuy-Anh Nguyen, product specialist at Dragon Capital, the manager of VEIL, on YouTube (below) or any podcast platform.
Thuy-Anh Nguyen, Dragon Capital | MoneyWeek Talks - YouTube
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David Prosser is a regular MoneyWeek columnist, writing on small business and entrepreneurship, as well as pensions and other forms of tax-efficient savings and investments. David has been a financial journalist for almost 30 years, specialising initially in personal finance, and then in broader business coverage. He has worked for national newspaper groups including The Financial Times, The Guardian and Observer, Express Newspapers and, most recently, The Independent, where he served for more than three years as business editor.
