Van Eck Global on Friday launched the Market Vectors Vietnam ETF, the latest in a series of ETFs designed to slice-and-dice the emerging markets investing universe.

The fund tracks the Market Vectors Vietnam Index, a free-float market capitalization weighted index of 28 companies that generate at least 50% of their revenue from Vietnam. Roughly two-thirds of the index's companies are based in Vietnam. The index is licensed to Van Eck by 4asset-management, a Frankfurt, Germany-based financial services company.

Vietnam is one of the so-called frontier markets, a subset of the emerging markets universe that comprises smaller, less developed and less liquid markets that nonetheless pack tremendous growth potential. Vietnam's stock market essentially didn't exist before 2000, but as of year-end 2008 there were 247 companies listed on the stock exchanges in Ho Chi Minh City and Hanoi.

Foreign capital has flowed into Vietnam in recent years, the country joined the World Trade Organization in 2007 and it's one of Asia's fastest-growing economies. In addtion, it has favorable growth demographics--half of its 85 million people are younger than 25 years old.

But Vietnam, like all emerging markets, can be very volatile. The Vietnam ETF's underlying index, for example, was down nearly 12% from its creation in December 2006 through the end of July 2009. But in between, the index soared during much of 2007 before crashing mightily from late 2007 through March 2009.

Since then, Vietnam's market has rallied strongly. For the year, the Market Vectors Vietnam Index was up 46% through the end of July.

The Market Vectors Vietnam ETF's net expense ratio is 0.99% (the gross expense ratio is 1.42%, but expenses are capped contractually through May 2010). Mid-cap and small-cap companies each comprise 43% of the fund, and it sports a 2.66% dividend yield.

Van Eck in January launched an Indonesia ETF, followed in May by an ETF focused on Brazilian small caps. Prior Market Vector ETFs include funds focused on Africa, the Gulf States and Russia. "The Vietnam ETF is a natural progression of this suite of products," says Adam Phillips, Van Eck's managing director of ETFs.

Phillips says Van Eck has filed to launch an ETF based on Chinese "A" shares, which are domestically-traded Chinese shares traded in Shanghai.