Opportunity, Warnings With Vietnam Frontier Market ETF

In what has been a mostly solid year for emerging markets equities, the VanEck Vectors Vietnam ETF (NYSEArca: VNM) is a laggard with a year-to-date loss of 2.5%.

As is often the case with the lone exchange traded fund dedicated to Vietnamese equities, market observers see both potential and reasons for concern with VNM.

While Vietnam is a communist country, the government has steered toward a quasi-free market economy that is strictly controlled by the state.

For instance, the government is setting a stronger tone to support private businesses over the next five years, Bloomberg reports. Vietnam’s 2016 to 2020 economic blueprint will create “favorable conditions” to support private companies.

SEE MORE: Vietnam ETF Rallies on New Five-Year Economic Plan

“Vietnam has an ambitious 6.7% growth target for the year, which they admit will be hard to achieve. However, they write that authorities’ focus on macroeconomic stability is an encouraging sign, even if it comes at the expense of a rapid acceleration of growth,” reports Teresa Rivas for Barron’s citing HSBC.