Vietnam Between the Powers: Opportunities Amid Rising Geopolitical Tensions
Vietnam is skillfully navigating the geopolitical tensions between the United States and China—two global superpowers with increasingly divergent interests. Strategically positioned as a production hub, Vietnam remains in the spotlight of international diplomacy, while offering long-term potential for forward-looking investors.
When former U.S. President Donald Trump imposed steep import tariffs of up to 46% on Vietnamese goods, the Vietnamese government responded swiftly—with diplomatic outreach, economic resolve, and initial countermeasures. Simultaneously, Vietnam deepened its trade ties with China. Both countries signed new cooperation agreements, exemplifying Vietnam’s trusted “bamboo strategy”: flexible in dialogue, but firm in defending its national interests.
Despite global pressures, Vietnam’s economy remains on track. GDP grew by 7% in 2024, and the government is targeting 8% for 2025. The World Bank is slightly more conservative with a 6.8% forecast, but recognizes that exports, technological development, and domestic consumption remain robust growth drivers.
Still classified as a frontier market, Vietnam is aiming for an upgrade to emerging market status in the medium term. Efforts to reduce bureaucracy, open capital markets, and invest in sustainable infrastructure are designed to accelerate this transition.
For investors, access to Vietnamese equities remains limited. The Ho Chi Minh Stock Exchange is still inaccessible through many international brokers. This is where investment funds come into play.
One of the most established options is the Lumen Vietnam Fund, managed by Swiss investment firm Aquis Capital. Since its inception in 2012, the fund has grown to USD 348 million in assets under management, delivering a compelling performance with an average return of 18% per year over the last five years—making it a leader among actively managed strategies.
A smaller alternative is the Galileo Vietnam Fund, which has also posted solid returns, but remains behind in terms of both size (USD 86 million AUM) and performance.
For those seeking a passive approach, the Xtrackers FTSE Vietnam Swap ETF offers low fees—but at a cost to returns, posting a disappointing -1.2% annualized performance over five years.
The takeaway: In a politically sensitive, restricted, and volatile market, active strategies demonstrate their advantage. Funds with strong local expertise, ESG integration, and long-term orientation—like the Lumen Vietnam Fund—are well-positioned to lead the next phase of Vietnam’s growth story.
