Vietnam may conjure images of war-torn jungles, but the reality today is much, much different than many people may realize. The country has staged such a turnaround that there’s never been a better time for an exchange traded fund (ETF) that gives investors the opportunity to access this growth.

Since the 1970s, and even in the last decade alone, Vietnam has made strides so great that it could be one of the more intriguing emerging market stories around. Its stock market was non-existent before 2000, and increasing foreign investment has enabled this country to do a virtual 180 in many respects.

Van Eck, which last week launched the Market Vectors Vietnam (VNM), published some impressive statistics in a fact sheet:

  • The proportion of households with electricity has doubled to 94% since the early 1990s
  • Nearly all children attend primary school
  • Of the country’s 85 million residents, half of them are younger than 25
  • Foreign direct investment tripled between 2007 and 2008 to $60.2 billion

“The government has taken a disciplined approach to managing the economy. I think they’ve gotten some of these problems under control, ” says Harvey Hirsch, senior vice president of marketing at Van Eck. As a result, the investment conditions are more favorable than they have been in the past.

That doesn’t mean Vietnam doesn’t have its share of struggles. Inflation, while more under control, still remains an issue. The country lacks basic infrastructure in many areas and the country’s government has a history of corruption. Vietnam still has some room to grow in order to become an entirely free market – about 60% of it is free, Hirsch says.

Vietnam stands to benefit from a batch of partnerships with other countries and corporations around the world. Europe’s largest bank, HSBC, plans to open branches in Vietnam; Intel (INTC) has built a chipset assembly and testing plant in Ho Chi Minh City; Japan’s Olympus group, along with other electronics companies, are exiting China and moving to open plants in Vietnam instead.

VNM’s underlying index tracks companies that generate at least 50% of their revenues in the country, with financials, energy and materials getting the top weightings. Vietnam represents 67.9% of the index; Singapore, 7.5%; United Kingdom, 6%; Malaysia, 5%. Canada, South Korea, India and Thailand are also represented.

Like any emerging or frontier market, Vietnam should be handled with caution. It’s still a Communist country and could experience volatility as it continues to grow. We suggest having both an entry and an exit strategy to protect yourself and mitigate risk.

For more stories on emerging markets, visit our emerging markets category.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.