China has had an impressive run. Its GDP has grown at double-digit rates while holders of Chinese stocks have earned triple-digit returns. While everyone else is talking about China, savvy investors should be asking where the next big growth story is.

The investment company Van Eck is betting investors are asking that very question and have launched the Market Vectors Vietnam ETF (NYSE: VNM) in response. It is the first and only exchange-traded fund focusing exclusively on Vietnam.

Vietnamese stocks have been on a tear this year. Vietnam’s benchmark, the Ho Chi Minh Stock Index, has outperformed China this year.

Top-10 Performing Markets YTD
Country	Index Performance
Peru	+104%
Turkey	+80%
Indonesia	+76%
Russia	+69%
Argentina	+68%
Vietnam	+67%
China	+65%
Sri Lanka	+64%
Brazil	+54%
India	+51%

Vietnam is the second-fastest growing economy in the world. Given its performance to date and its outlook for future growth, the nation could well be the next great Asian tiger. As in China, communism is on its way out. The country — which will need to rename its stock exchange sooner or later — is shifting toward a market-oriented economy, and its government is promoting foreign investment.

#-ad_banner-#Vietnam’s educated and skilled workforce has a chance to supplant China as the go-to country for low-cost labor. Some companies are already pulling out of China to open plants in Vietnam. That’s one of the reason Vietnam’s GDP is expected to grow at a +6-7% annual clip from 2010 to 2012. That’s close to China’s anticipated growth rate, and it trounces the growth forecasts for the U.S. and Europe.

No public company operating in Vietnam has shares listed on a U.S. exchange. VNM began trading Aug. 14 and offers the simplest way to own shares of Vietnamese companies. About 70% of the market cap of the underlying index is of companies based in Vietnam. The others are companies that do at least half their business there. The fund is weighted toward financials (37%), energy (19%) and materials (13%).

Here are VNM’s top holdings:

Company	Business	% of Net Assets
Vietnam Dairy	Food manufacturer	11.9%
HAGL	Real estate, manufacturing	8.0%
Hoa Phat Group	Industrial	7.4%
Sacombank	Financial	6.0%
PetroVietnam F&C	Agricultural chemical	5.4%

The fund charges an expense ratio of 0.99%, far less than what a mutual fund charges for this kind of international exposure. And unlike mutual funds, ETFs are listed on an exchange and trade like stocks.

The Vietnam rally isn’t a gimme. There’s some risk. The country has battled high inflation in the past and could again, although declining commodity prices have lessened that threat. The country is still under communist rule and corruption is widespread, either could hamper growth or scare off potential foreign investment.

Vietnam is considered a “frontier” market, which means investors must have a relatively high risk tolerance, as the stocks tend to be volatile. Investors should also make sure they’re comfortable with a new fund’s reduced liquidity before they jump in.

Shareholders with a long time horizon could see big gains with this fund. Vietnam has come a long way: The future looks bright for its people and its investors.