MW Here's a rare chance to front-run Wall Street's best and biggest players

By Mark Hulbert

Vietnam is expected to be promoted to 'emerging' market from 'frontier' market. Here's when you'll need to act.

Rush hour in Hanoi, Vietnam. The country's stock market is expected to receive an upgrade that should draw institutional investors.

Front-running is a common practice among some large Wall Street firms - typically at the expense of retail investors.

You'll soon have an opportunity to front-run the institutional investors that dominate Wall Street.

Such opportunities are rare, and typically occur far from Wall Street and out of the limelight. That certainly is the case with this upcoming opportunity: FTSE Russell's plan to reclassify Vietnam's stock market from "frontier" market to the "secondary emerging" category.

It's a seemingly insignificant move - but one that promises to substantially increase the amount of index-fund assets invested in Vietnamese equities.

Front-running produces low-risk profits because you are exploiting the predictable price impact of trades already in the pipeline but not yet executed. As author Michael Lewis detailed in his book "Flash Boys," front-running is a common practice among some large Wall Street firms - typically at the expense of retail investors. The Vietnam investment opportunity reverses this, with retail investors slated to come out on top.

The reason that FTSE Russell's plan creates this rare opportunity is that, even when index funds know in advance the day(s) by which they will need to have increased exposure to a given country's equities, they wait until those day(s) to actually do so. That's because index funds typically go to great lengths to reduce their so-called tracking error with the underlying indices.

Exploiting this front-running opportunity is simple: Just invest in Vietnamese stocks in anticipation of the substantial inflow of new cash once the country's reclassification takes effect. Consider exchange-traded funds including Global X MSCI Vietnam ETF VNAM and VanEck Vietnam ETF VNM.

Drew Miyawaki, director of managed investment solutions at Westwood Management, said in an interview that while it's difficult to project the precise amount of this inflow, it could lead to "a significant uptick" in trading activity and consequently boost the Vietnamese stock market. Some estimates put the inflow as high as $5 billion.

A case study: Canada

To illustrate the profit potential of exploiting changes in index compositions, consider the impact on Canadian equities of the shift that began several decades ago for index-fund investors interested in establishing global equity exposure.

Up until the late 1990s, the dominant index by far was MSCI's Europe, Australasia and Far East (EAFE) index. Around 25 years ago that index began being eclipsed by MSCI's All-Country World Index $(ACWI)$.

This had a big impact on Canada because the EAFE index has zero exposure to Canadian stocks, while ACWI includes that market. As a result, ACWI's growing dominance led to greater exposure to Canadian stocks.

This impact on Canada was gradual, since it grew as money shifted away from EAFE to ACWI. But the shift began around 2000; in October of that year I wrote a column heralding the shift and noting the bullish impact it would likely have on Canadian equities.

For Vietnam, here's when you will need to act: FTSE's reclassification of the Vietnamese market will take place in stages. FTSE Russell is expected to announce the timing of the shift in April. Implementation is slated to begin in September - so you'll want to get in before Wall Street does.

Mark Hulbert is a regular contributor to MarketWatch. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. He can be reached at mark@hulbertratings.com

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-Mark Hulbert

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March 12, 2026 08:10 ET (12:10 GMT)

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