I left a top job in Hong Kong banking to invest in a frontier market. Here’s why

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Andreas Vogelsanger

At the start of this decade, Andreas Vogelsanger had a senior Hong Kong-based job at one of the world’s oldest banks, Coutts. Now he’s at the helm of a small investment firm which focuses on one of Asia’s fastest-growing frontier markets, Vietnam.

“My current role is quite a contrast with Coutts,” says Vogelsanger, formerly head of banking products and treasury services Asia at Coutts, now CEO of AFC Vietnam Fund. “Going to the buy-side from banking is common enough, but moving to a Vietnam-focused firm is still fairly unusual”

Vogelsanger first visited Vietnam as a tourist in the mid-1990s. “I just saw bicycles then; now you can’t move for motorbikes and cars, and the investment opportunities are huge,” he told eFinancialCareers at the recent CFA Institute Annual Conference in Hong Kong. “Vietnam is about 15 years behind China in its development, but it’s catching up quickly. GDP is expected to grow at around 6.8% this year.”

Index publisher MSCI still classifies Vietnam as a frontier market, but Vogelsanger is confident that it will eventually be reassigned as an emerging market. “That’s when a lot of new money will pour into the country, given that all the emerging-market funds will want to invest,” adds Vogelsanger, who began his career at Chase Manhattan in Geneva in 1985 as a bond trader and worked in that field for 16 years before joining Julius Baer in a product-head role.

Vogelsanger set up his Vietnam fund in 2013 with fellow Swiss finance professionals Thomas Hugger and Andreas Karall, the former of whom also founded umbrella firm Asia Frontier Capital, which operates across other Asian countries. “The Vietnamese market collapsed in 2007, but by 2013 things were looking better. The currency was stable, inflation was under control, and the banking system had become better regulated.”

AFC Vietnam only managed $3.6m when it started out, all sourced from its founders and their friends and family. Its current assets are about $45m. “But this is still very small in the fund world and we want to grow it to around $250m,” says Vogelsanger.

The fund, which is based in Hong Kong, isn’t  currently hiring, but may add a Vietnamese-speaking financial research analyst in the future, says Vogelsanger. “Interest in covering or working in Vietnam is slowly starting to grow among finance professionals, given that the economic outlook there is so bright,” he adds. “When we launched, 10% of market participants in Vietnam were foreign; now around 15% to 20% are. As financial markets there expand, the country will attract more foreign capital and more foreign talent.”

Vogelsanger’s job comes with challenges, however. “The language barrier is probably the biggest one. I now bring native-speaking Vietnamese people along to my business meetings to avoid misunderstandings,” he says.

“From an investment-risk perspective, corporate governance and liquidity are the main ones we’re trying to mitigate,” adds Vogelsanger. “That’s why we invest in a diversified portfolio of 73 companies to carefully control concentration risk. This allows us to sell or buy positions without having a significant market impact. Also, should there be, for example, a balance sheet fraud in one of our holdings, the effect on the overall fund would be quite limited.”

Vogelsanger says he is enjoying working on the buy-side after almost 30 years in banking. “But if you’re thinking of moving to the buy-side, be aware that keeping on top of the regulatory requirements can be challenging,” he adds. “Long-tern, I believe these regulations will force the industry to become more efficient and adopt more fintech solutions. The investment sector therefore needs more talented young professionals with fintech know-how.”

Currently living in both Hong Kong and Bangkok, Vogelsanger also travels frequently to Vietnam and to see investors in countries such as Switzerland, Japan, Singapore and the UK. “It’s a Nomad-like existence, and giving up the financial security of my banking job was difficult at first. But it’s also extremely rewarding. When you set up your own firm, your business quickly becomes your hobby and you don’t mind all the hours you have to put in to be successful.”

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