Amidst a supportive macroeconomic backdrop, marked by the government’s strong commitment to growth and a low interest rate environment, Vietnam’s stock market has seen a significant uptick. In the year to mid-September, the benchmark VN-Index had risen 33.01%.

Paradoxically, this robust market rally has posed challenges for many investment funds. According to data from Fmarket, several funds have underperformed the VN-Index as of the September 15 trading session

Experts attributed this to the market’s uneven growth. While the VN-Index has surged, the rally has been concentrated largely in July and August, with capital flowing into only a select group of stocks and sectors. Consequently, achieving alpha required precise sector allocation, stock selection, and market timing.

In contrast to retail investors, institutional funds cannot “go all in” on a single stock or sector. Their portfolios must remain diversified and comply with liquidity and weighting rules. As a result, it becomes increasingly difficult for many funds to outperform a sharply rising VN-Index.

DCDS: A rare outperformer

Against this backdrop, DCDS stands out. As of mid-September 2025, it was the only open-ended fund in Vietnam with assets under management (AUM) above VND300 billion ($11.36 million) to have outperformed the VN-Index.

According to its September 15 NAV report, DCDS posted a year-to-date return of 34.38%, with its NAV per unit reaching VND109,435.73 ($4.15), surpassing the VN-Index’s 33.01% gain.

DCDS is an open-ended equity fund managed by Dragon Capital Vietfund Management JSC, one of the most established and respected fund managers in Vietnam.

The strategy behind outperformance

DCDS’s superior performance reflects a combination of sound portfolio rebalancing and tactical asset allocation.

Prior to April, the fund raised its cash ratio to 24%, positioning itself defensively before pouring capital during the market dip. Key allocations at the time included VIC of Vietnam’s largest private conglomerate Vingroup and VHM of its real estate arm Vinhomes. These two stocks helped lead the VN-Index’s recovery following a major policy shock related to tariffs.

By late June 2025, DCDS pivoted again, reducing exposure to VIC and VHM and shifting toward bank stocks such as TCB of Techcombank, STB of Sacombank, MBB of MBBank, and CTG of VietinBank. The fund’s overall banking sector exposure rose from 28.28% in May to 31.73% by the end of June.

In July, the fund added VPB of VPBank, initially taking a 2.88% position and subsequently increasing it to 8.07% by the end of August. VPB alone delivered an 89.2% return during July and August, significantly contributing to the VN-Index’s record-breaking momentum.

Thanks to agile sector rotation and precise timing, DCDS generated impressive gains from its trading activity, lifting its overall performance well above market average.

Long-term performance: A track record of success

DCDS isn’t just a one-year wonder. Its three-year and five-year returns also tell a compelling story.

According to investment professionals, a five-year period is the gold standard for evaluating a fund’s long-term competence. During this time, DCDS delivered an exceptional 170.1% return, dwarfing the VN-Index’s 75.1%.

A key advantage is DCDS’s broad investment universe - it typically holds 50-60 stocks, while most funds in Vietnam concentrate on 20-40. This allows for better diversification and liquidity management as AUM scales with market growth.

Despite its larger size relative to peers, DCDS has remained in the top performance tier, thanks to its diversified holdings and adaptive portfolio management.

For long-term investors, DCDS offers a compelling case for capital accumulation through systematic investment plans (SIPs) or dollar-cost averaging (DCA). Notably, 30% of investors who have held DCDS units for over two years have achieved returns exceeding 45%.

Human capital behind the success

While portfolio composition and investment strategy are crucial, the real differentiator lies in the human capital behind DCDS.

Established in May 2004, DCDS has weathered multiple economic crises, including the 2008 global financial crisis and the Covid-19 pandemic. This depth of experience is a key asset in navigating market volatility and reading capital flows.

The fund’s leadership includes seasoned professionals such as Dr. Le Anh Tuan, chief investment officer and CEO of Dragon Capital Vietnam (effective October 1, 2025) – 16 years in the industry; Vo Nguyen Khoa Tuan, senior portfolio manager – 16 years; Nguyen Sang Loc, portfolio manager – 15 years; and Luong Thi My Hanh, head of domestic asset management – 21 years.

This experienced team has enabled DCDS to consistently execute a strategy described as “weather all weathers”, delivering results across both bull and bear markets.

The outperformance of DCDS in 2025 and over the past three to five years is the result of a unique confluence of factors: a favorable macroeconomic environment, a growing stock market, and, most importantly, a smart and adaptive investment strategy executed by a highly experienced team.