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Recent sovereign debt rating upgrade from Moody's is giving investors confidence.

Limited opportunities to make direct investments in the marketplace.

Country is becoming significant in manufacturing.

On July 29 Moody's Investors Service raised Vietnam's sovereign rating citing the country's emerging track record of macroeconomic stability. The rating service company cited an improving balance of payments and rising foreign-exchange reserves. The rating firm said it raised the senior unsecured and issuer bond ratings of Vietnam by one notch, to B1 from B2, with a stable outlook. The new rating is four notches below Investment grade. Moody's also raised the Southeast Asian nation's long-term foreign currency bond ceiling to Ba2 from B1, and its long-term foreign currency deposit ceiling to B2 from B3.The firm also raised Vietnam's local currency country risk ceiling to Ba1 from Ba2.

Vietnam's economic growth is heavily dependent on loans, and Moody's in early July cautioned that increasing bad debts could significantly undermine the resilience of Vietnam's banking sector. The country is aiming for gross domestic product growth of 5.8% this year compared with last year's growth of 5.42%. The country continues to be one of the leaders in agricultural exports though, and is ranked second in rice, second in coffee, and first in cashew exports worldwide.

This rating upgrade has sparked a renewed search for Southeast Asia's lowest valuations and improved economic growth outlook.

On August 9, Bloomberg reported that frontier-market equity funds are placing significant amount of capital in the country at a rapid pace. It was reported that overseas money managers bought a net US$277.1 million of the country's shares, which is 5.3% more than the whole of 2013. The result has been a 20% increase in the benchmark VN Index. What is interesting and attractive is that even after the gains, the VN Index is valued at only 13.7 times projected 12 month earnings, the least among the six major Southeast Asian markets. After the anti-China Protests in May the government devalued the local currency, the Dong, to spur shipments. Many fund managers continue to add to holdings, believe that exports will increase and the balance of trade will improve.

In terms of opportunities to trade in the markets there are limited US dollar securities or ADRs. In fact, the country will only have its first domestic ETF sometime next month. There is a Euro denominated DBX tracker and there is an attractive iShares MSCI Frontier-market fund (NYSEARCA:FM) that has Vietnamese holdings. I do think that fund is attractive and has good upside but it is not a "pure" play on Vietnam and has many other frontier countries amongst its holdings including Kuwait, Nigeria and Argentina to name a few. The only US listed fund is the Market Vectors Vietnam Fund (NYSEARCA:VNM).

According to Yahoo Finance the investment seeks to relocate as closely as possible, before fees and expenses, the price and yield performance of the Market Vectors Vietnam Index. The fund normally invests at least 80% of its total assets in securities of Vietnamese companies. A company is generally considered to be a Vietnamese company if it is incorporated in Vietnam or is incorporated outside of Vietnam but generates at least 50% of its revenues (or, in certain circumstances, has at least 50% of its assets) in Vietnam. The fund is non-diversified.

I would prefer a pure play with all local Vietnamese companies and in US dollars, but VanEck Global, the fund's introducer has done a good job of selecting companies. Under the "Market Vectors" brand name, the fund tracks the index. According to VanEck, the index is a rules-based, modified market-capitalization weighted, float-adjusted index comprised of publicly traded companies that are domiciled and primarily listed in Vietnam or that generate the majority of their revenue in Vietnam. The index is rebalanced quarterly, with the fund distributing annually.

The ETF has local Vietnamese companies such as Vingroup JSC, Masan Group Corp., Bank for Foreign Trade of Vietnam JSC, and PetroVietnam Technical Services Corp. amongst others. With $587.6M total net assets, it has achieved an approximately 11.40% return year to date and one year of 15.22% with a yield of approximately 2.82%. The fund, as an ETF, has a low Net Expense Ratio of .72%. It is trading just slightly below its NAV at this time. The fund was trading at $21.88 +.20 on August 15. Its year high is $23.15 which it hit on February 26. Based upon the flow of funds into Vietnam and the continuing of exports, we look for a six month target of $25.00 for a total return including an approximate dividend of $.59 of approximately 17.0%. We also look for continued growth into the later part of 2015 and recommend the ETF as a strong buy in a very attractive frontier market.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.