Vietnam Funds Struggle Despite Record Market Highs

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Nearly 20 investment funds posted losses even as Vietnam’s benchmark VN-Index reached an all-time high, exposing a widening gap between headline gains and underlying market performance.

VIETNAM INSIDER – Vietnam’s stock market may be celebrating record highs, but a closer look reveals a more troubling reality for investors. While the VN-Index briefly climbed to an all-time peak of 1,933 points in May, nearly two-thirds of actively managed investment funds failed to keep pace, and 18 funds remained in negative territory after the first five months of 2026.

The divergence highlights a challenge increasingly familiar to global investors: headline index gains driven by a handful of heavyweight stocks can mask widespread weakness beneath the surface. In Vietnam’s case, the rally was heavily supported by shares linked to major property conglomerate Vingroup, while many sectors struggled to attract sustained capital inflows.

Vietnam’s benchmark index closed May at 1,863 points, up just 0.5% from April despite reaching record territory earlier in the month. The broader picture was even less impressive, with the VN30 Index—tracking the market’s largest companies—falling 1.3% during the same period. Since the start of 2026, the VN-Index has gained 4.4%, while the VN30 remains down 1.7%.

Data compiled from fund reports shows that only three of 30 actively managed funds outperformed the benchmark during the first five months of the year. VNDAF led the field with a 9.3% return, followed by TVGF3 at 4.8% and TVGF4 at 4.7%. Meanwhile, only 12 funds delivered positive returns, while 18 posted losses—an increase from just 11 loss-making funds a month earlier.

The performance gap underscores the growing difficulty of active management in highly concentrated markets. Several funds managed by Dragon Capital ranked among the weakest performers despite holding significant positions in index-leading stocks. DCDS and DCDE both maintained exposure to Vingroup-related names such as VIC and VHM, yet still recorded losses of 6.5% and 6.1%, respectively, after broader portfolio holdings struggled. Retail giant Mobile World Investment Corporation, one of their major positions, fell more than 9% in May, offsetting gains elsewhere.

Even the market’s best-performing fund, VNDAF, illustrates how fragile performance leadership can be. Its year-to-date return of 9.3% remains impressive, but that figure has sharply retreated from 16.5% recorded just one month earlier. Several of its largest holdings, including NVL, VCG, VCI, and HHV, came under pressure in May. Property developer NVL alone dropped roughly 26% after surging 45% in April, highlighting the volatility that continues to define Vietnam’s equity market.

For international investors, the lesson extends beyond Vietnam. Similar patterns have emerged in markets ranging from the United States to India, where a small group of dominant stocks has increasingly driven benchmark returns while the average stock lags behind. Such environments often reward passive index exposure while making stock selection considerably more challenging.

As Vietnam enters the second half of 2026, investors remain focused on potential market-upgrade status, resilient economic growth, and improving corporate earnings. Yet risks persist, including foreign investor outflows, global interest-rate uncertainty, and geopolitical tensions. The real story behind Vietnam’s record-breaking stock market may not be how high the index climbed—but how few investors were actually able to benefit from the ride.

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Source: Vietnam Insider