Investing in Vietnam: Lion Capital Vietnam Fund

Lion Capital Vietnam Fund will "invest in Authorised Investments which are equities, equity-related instruments (including, without limitation, interests in property funds) and securities in Vietnamese incorporated companies or institutions, as well as in companies or institutions which although not incorporated in Vietnam, have operations in, exposure to, or derive part of their revenue from Vietnam, and the Indo-China Region (which includes, but is not limited to, Cambodia, Laos and Myanmar)."

Vietnam is presently experiencing a boom in its stock market and many people are getting excited about investing in Vietnam. However, such optimism is perhaps dangerous if our bets are not hedged.

Vietnam's stock market is presently still very small and statistically, a small market is inherently volatile and gains in a few good stocks skew the investment numbers. Vietnam is very much just starting to develop and still largely lacks transparency, credible institutions, a functioning financial sector, and clear legal rules and regulations. Investing into Vietnam itself will require the investor to keep his eyes wide open and ears primed for importance information.

I believe that investing in Vietnam is currently a highly speculative move and Lion Capital Vietnam Fund's mandate includes firms with exposure to, or derive part of their revenue from Vietnam, and the Indo-China Region, not just stocks listed there. This will definitely help to diversify the risks somewhat but since it is still primarily a single country fund, it will be prudent to expect a larger degree of volatility.

While the gains are potentially good, the associated risks do put me off taking up the Lion Capital Vietnam Fund at the present moment.