Vietnam’s economy continues to shine with strong growth figures. International equity investors can benefit from this momentum while also diversifying their portfolios. Early investors may additionally capitalize on the country’s anticipated transition to Emerging Market status.

The term Doi Moi (“Renewal”) has shaped Vietnam’s economy for nearly 40 years. In 1986, the Communist Party of Vietnam launched a reform process under this name, gradually transforming the country from a centrally planned economy toward a market-oriented system and driving remarkable economic growth. For 2026, the International Monetary Fund expects GDP growth of 7.1%.

Strong Growth Drivers

Vietnam’s economic momentum is built on several pillars that are likely to ensure stability and growth over the medium term — creating an ideal environment for equity investors. First, a robust macroeconomic environment with relatively low debt levels and healthy household finances provides an excellent foundation for rising consumer demand and credit growth. In addition, the country benefits from favorable demographics, with a young population and an average age of just 33 years.

A second key growth driver is the manufacturing sector. Vietnam is benefiting from the restructuring of global supply chains by international companies. “Companies view the country as an attractive manufacturing hub for higher value-added products. Foreign direct investment has recently reached record highs,” says Mario Timpanaro, portfolio manager of the Lumen Vietnam Fund at AQUIS Capital.

Two further engines of growth are the consistent expansion of infrastructure and rising domestic consumption. Increasing incomes, urbanization, and a growing middle class are boosting local demand and complementing the export-oriented economy.

Low Correlations, Attractive Valuations, and Upgrade Potential

Vietnam’s structural strengths provide a solid foundation for a growing equity market with strong earnings momentum and rising share prices. Due to its relatively low correlation with developed equity markets and even many emerging markets, Vietnamese equities offer an attractive diversification opportunity within global investment portfolios.

Despite these positive fundamentals, valuations in the Vietnamese equity market remain attractive. “Risk premiums still reflect a certain degree of caution among international investors, and the country’s long-term growth potential is not yet fully priced in,” explains Timpanaro.

Vietnam is still classified as a Frontier Market by major index providers — though this may soon change. In September, FTSE Russell plans to begin integrating Vietnam into its Emerging Markets Index. MSCI remains more cautious, but an upgrade to Emerging Market status is also expected there in the coming years. Such reclassifications typically increase investor interest and can trigger additional capital inflows.

Market Volatility Creates Entry Opportunities

The risks associated with investing in Vietnam are often overestimated. Historically, the market has shown a certain resilience to external shocks. Although the Vietnamese equity market cannot fully escape global volatility during periods of crisis, it has frequently recovered faster than many other emerging markets.

“Short-term external shocks — including current developments — can create volatility. However, they do not change the long-term fundamentals. In fact, such market phases often present the most attractive opportunities for active investors,” says Timpanaro. For him and the fund management team, Vietnam remains one of the most compelling growth stories in Asia, offering strong momentum for investors.

Interview with Mario Timpanaro, AQUIS Capital 

“Vietnam: From Frontier to Emerging Market – Return Opportunities Through Market Inefficiencies”

Mario Timpanaro, manager of the Lumen Vietnam Fund, discusses the impact of the Iran war on Vietnam’s economy, the characteristics of the Vietnamese stock market, and why it is particularly suited for active management.

Mario Timpanaro, Manager des Lumen Vietnam Fund

Mr. Timpanaro, what impact do the Iran war and related developments have on Vietnam’s economy and equities?

Mario Timpanaro: In the short term, Vietnam is not immune to global tensions. Rising prices for commodities such as oil, gas, and fertilizers are increasing inflationary pressure and affecting consumer confidence as well as the margins of energy-intensive industries. Potential disruptions in global supply chains may also temporarily impact manufacturing and export sectors.

At the same time, Vietnam is structurally well positioned. The country’s energy supply is more diversified, and the government has political and fiscal flexibility to respond selectively.

From a market perspective, such periods often lead to increased volatility. However, for long-term investors, these moments can provide attractive entry opportunities because the fundamental growth story remains intact.

What characterizes the Vietnamese equity market?

Timpanaro: The Vietnamese equity market includes around 1,600 listed companies, but it is heavily concentrated in a small group of large-cap stocks with high market capitalization and liquidity. Most companies receive limited coverage from international brokers due to language barriers and liquidity constraints.

The market structure is clearly retail-driven, which regularly leads to overreactions in individual stocks. At the same time, high-quality but less visible companies — especially in the small- and mid-cap segments — are often under-researched and undervalued.

The combination of regulatory inefficiencies, local reporting practices, limited research coverage, and high index concentration creates structural inefficiencies that active investors can exploit. Looking ahead, we expect further improvements in transparency and market infrastructure, driven by reforms and the targeted inclusion in FTSE and MSCI Emerging Markets indices.

What advantages does an actively managed fund have over an index fund in the Vietnamese market?

Timpanaro: As mentioned, the Vietnamese market is inefficient and shows significant quality differences between companies. An index does not capture these differences — it simply weights companies according to market capitalization, regardless of corporate governance, capital allocation quality, or sector concentration risks such as banks or real estate.

Through our active approach, we can selectively invest in high-quality companies, including mid-sized businesses. We are able to identify structural winners, build a diversified portfolio across multiple promising sectors, and actively manage risks. In a dynamic market like Vietnam, active selection is crucial for long-term investment success.

What is particularly important to you when selecting stocks?

Timpanaro: Our focus is clearly on the quality of growth. We look for companies with strong market positions, solid balance sheets, and compelling strategic direction.

A good example is companies operating industrial and logistics parks, which directly benefit from rising foreign direct investment. These firms often have long-term lease agreements, highly visible cash flows, and benefit from structural growth over many years.

Looking ahead: What are the main drivers for Vietnamese equities? What risks do you see?

Timpanaro: In the coming months, we continue to see an environment offering both opportunities and risks. On the risk side, there are ongoing geopolitical tensions, a potential slowdown in global demand, and inflationary pressure.

At the same time, the key growth drivers remain intact: rising foreign direct investment, large-scale infrastructure projects aimed at increasing productivity, and a growing middle class providing strong support to domestic demand. And finally, there is the anticipated upgrade of Vietnam to Emerging Market status.

Fund Profile: Lumen Vietnam Fund

Focus on Vietnam’s High-Growth Mid-Market Companies

At AQUIS Capital, a local analyst team conducts research for the Lumen Vietnam Fund. Their expertise and extensive network help identify promising growth companies at an early stage and respond actively to market developments.

Vietnam offers much more than tourism opportunities — it is also highly attractive for investors. The equity market is becoming increasingly accessible to international investors, allowing them to participate in the economic rise of a country with 102 million inhabitants. Investors can also gain exposure through funds.

The Lumen Vietnam Fund was launched in March 2012. Portfolio manager Mario Timpanaro has been involved from the beginning and is co-initiator of the actively managed UCITS fund focused on Vietnamese equities.

The fund, domiciled in Liechtenstein under the umbrella of the Swiss fund boutique AQUIS Capital, has grown to approximately EUR 380 million in assets under management. This growth reflects rising investor interest in diversifying into the Vietnamese equity market, as well as the success of the fund’s strategy.

Investors who participated from inception have quadrupled their investment. This corresponds to an average annual return of more than 10% in the fund’s base currency, US dollar (Lumen Vietnam Fund -USD-R, as of March 31, 2026). Currency-hedged EUR and CHF share classes are also available.

Strong Local Presence

The foundation of the strategy’s success is the local team. “It is essential to be deeply rooted in Vietnam,” says Timpanaro. Although he lives in Switzerland, he visits his second home, Vietnam, several times a year.

“With AQUIS Capital’s subsidiary, Vietnam Holding Asset Management, we have a highly qualified team in Ho Chi Minh City independently analyzing listed companies. Our analysts are very well connected within the economy and also have an excellent understanding of the political environment,” says Timpanaro.

This expertise helps identify growth opportunities early and position the portfolio advantageously. While the fund also invests in large caps, there is a particular focus on small- and mid-cap companies. In these segments, proprietary research is indispensable and creates opportunities to participate in the future growth of promising business models.

The fund invests in companies with above-average growth potential, strong competitive positioning, and convincing management teams. ESG criteria are also integrated into the Lumen Vietnam Fund’s investment process, with particular emphasis on strong corporate governance.

Timpanaro believes that, especially in emerging markets such as Vietnam, companies with transparency, shareholder rights, and ethical business practices are more resilient and better prepared for future challenges.

Dynamic Portfolio Allocation in a Volatile Environment

Approximately 100 companies make it onto the fund’s selection list, while the portfolio typically holds between 35 and 45 stocks.

The active management approach combines top-down and bottom-up analysis and responds dynamically to market developments. Against the backdrop of gradually rising interest rates since late 2025, the portfolio has recently increased exposure to sectors benefiting from higher rates. The energy and consumer staples sectors now carry higher weightings, and the cash allocation has been increased — supported partly by fresh investor inflows. At the end of March, cash stood at around 12%, compared with 19% at the beginning of the month.

This positioning helped cushion part of the negative impact caused by market volatility related to the Iran war in March. While the fund was not immune to losses during the month, it outperformed the Vietnam All Share Index and, unlike the index, still delivered positive performance for the first quarter.

The management team is now using its cash reserves to gradually increase exposure to sectors and companies that have experienced significant valuation discounts in the rising-rate environment but remain resilient against short-term challenges.

Active Asset Management

AQUIS aims to become a leading specialist in active asset management with a focus on alternative investments and Emerging Asia.

Protecting Client Interests

We take the time to understand our clients’ needs and implement tailored solutions. Our passion for what we do is reflected in our relationships with clients.

Sustainability — A Core Commitment

The UNPRI Sustainable Development Goals (SDGs) and ESG principles are integrated into our investment process and form an essential part of our thinking and actions.

Independence

100% independent, entrepreneurial in mindset, focused on long-term and tailored investment solutions for our clients. All our employees are highly motivated and committed to finding the right balance between opportunity and risk.

Source: https://www.private-banking-magazin.de/perle-fuers-portfolio/