FOREIGN TRADE UNIVERSITY

FACULTY OF FINANCE AND BANKING

‐‐‐‐‐‐‐‐***‐‐‐‐‐‐‐‐

PORTFOLIO MANAGEMENT

TOPIC: INVESTMENT PORTFOLIO RECOMMENDATION

Class: DTUE406.1
Lecturer: PhD. Nguyen Dinh Dat
Group: 8
Members: Lê Mai Anh - 2012340003
Lại Hoàng Sơn - 2012340044
Hồ Minh Sang – 2014340221
Trần Hương Lê - 2013340009

Hanoi, November 18 th 2023

 TABLE OF CONTENTS
I. Planning ............................................................................................................................ 3
1. Client’s need interpretation ......................................................................................... 3
2. Investment Policy Statement ........................................................................................ 4
2.1. Statement of purpose ............................................................................................. 4
2.2. Statement of Duties & Responsibilities ............................................................... 5
2.3. Procedures ............................................................................................................. 5
2.4. Investment objectives ............................................................................................ 6
2.5. Investment constraint ............................................................................................ 7
2.6. Tax purpose ........................................................................................................... 8
2.7. Income needs ......................................................................................................... 9
2.8. Liquidity needs ...................................................................................................... 9
2.9. Investment guidelines............................................................................................ 9
2.10. Evaluation and review ....................................................................................... 10
II. Execution ....................................................................................................................... 10
1. Market overview ........................................................................................................ 10
2. Assets allocation......................................................................................................... 13
2.1. Cash investments ................................................................................................. 14
2.2. Equity .................................................................................................................. 16
2.3. Recommended assets allocation.......................................................................... 19
3. Recommendation portfolio......................................................................................... 20
3.1. Cash investments ................................................................................................. 20
3.2. Stock market........................................................................................................ 25
III. Feedback ...................................................................................................................... 35
 LIST OF FIGURES
Figure 1: Assets Allocation ................................................................................................ 19
Figure 2: Efficient frontier ................................................................................................. 32
Figure 3: Capital allocation line ......................................................................................... 34
Figure 4: Price fluctuations of three stocks through three days ......................................... 39
Figure 5: Returns of three stocks through three days......................................................... 40

LIST OF TABLES
Table 1: Current interest rates for savings deposits in November 2023 ............................ 23
Table 2: Recommended cash investment ........................................................................... 24
Table 3: Mean, variance and standard deviation of three stocks ....................................... 29
Table 4: Covariance and correlation of three stocks .......................................................... 30
Table 5: Output from solver for plotting the portfolio frontier:......................................... 31
Table 6: Sharpe ratio of the portfolio ................................................................................. 34
Table 7: Recommended stock portfolio ............................................................................. 35
Table 8: Official portfolio .................................................................................................. 35
Table 9: Results on November 15th ................................................................................... 36
Table 10: Results on November 16th ................................................................................. 36
Table 11: Results on November 17th ................................................................................. 36
Table 12: Summary results................................................................................................. 36
Table 13: Comparison of results with benchmark ............................................................. 37

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I. Planning

1. Client’s need interpretation

Our client is Ms. Emily, 25 years old. She is a young professional in her mid-20s. She
recently graduated from university with a degree in marketing and has started her career at
a reputable advertising agency. She is passionate about her work and aspires to advance in
her field and take on more significant responsibilities in the coming years. Emily is focused
on building a successful career and is dedicated to personal and professional growth. Given
that, she has a long-term time horizon for investments. This allows her to potentially take
on more risk and invest in assets with higher growth potential. She may have the capacity
to hold investments for an extended period, benefiting from compounding returns and
weathering market fluctuations.

Emily's primary source of income is her full-time job at the advertising agency. She
receives a steady monthly salary, which covers her living expenses and allows her to save
a portion of her income for investments and future goals. Recently, Emily inherited a
significant sum of money from a family member. She has a sizable amount of capital
available for investment, which she intends to allocate strategically to achieve her financial
goals. Her capital is 500.000.000 VND. Emily's stable income from her full-time job
provides her with a reliable cash flow to cover her living expenses. This stability allows her
to take a balanced approach to investment risk, as she doesn't rely solely on investment
returns for day-to-day expenses. It also means she may have the capacity to invest a portion
of her income regularly, contributing to her long-term investment goals.

Emily’s motive to invest is for wealth accumulation and homeownership. Emily wants
to build wealth over the long term by investing her available capital. She aims to take
advantage of compounding returns and the growth potential of her investments to increase
her net worth steadily. Emily also aspires to achieve financial independence, where her
investments generate sufficient income to cover her expenses and provide a sense of
financial security. She wants to establish a reliable income stream from her investment
portfolio that can support her lifestyle and provide a safety net. Emily also has specific

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financial goals in mind, specifically purchasing a home. By investing wisely, she aims to
accumulate the necessary funds to achieve these goals within the desired time frame, which
is around 10 years later.

2. Investment Policy Statement

Ms. Emily Do: Individual Investor, age 25.

Portfolio: Individual, Taxable.
City: Hanoi, Vietnam.
Current assets: 500,000,000 VND
Investor type: Moderate conservative.
Time horizon: 10 years
Return Goal: 15%
1-year loss limit (maximum loss): 10%

2.1. Statement of purpose

The Investment Policy Statement (IPS) is the cornerstone of the investment management
process and it is the foundation upon which our work together will be based. Investment
decisions will be made in concert with the guidelines that QASL Financial Advisors and
Emily Do agree upon and outline in this document. The IPS opens a channel of
communication between the Advisor and the Client, allowing important issues and
concerns of both parties to be clarified.
The Investment Policy Statement:
• Establishes the criteria for matching the Client’s objectives to an appropriate investment
plan.
• Provides a frame of reference to keep the Advisor and Client focused on investment
objectives. This focus is especially valuable during periods of market volatility when there
may be a temptation to react to short-term factors.
• Establishes the criteria against which progress will be measured.

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2.2. Statement of Duties & Responsibilities

a. The Advisor

QASL Financial Advisors, will act as a fiduciary to the Client and manage the Portfolio
in a manner that is consistent with this Investment Policy Statement. QASL utilizes an
investment committee to conduct research and monitor markets. The committee is chaired
by the Chief Investment Officer, and includes all advisors and investment operations
personnel. The committee convenes on a bi-weekly basis, with updates being provided on
an ad-hoc basis by members. In addition, automated systems that alert the committee of
pre-defined events (portfolio drift, movements beyond pre-defined limits, etc.) will be
utilized.

The Advisor is responsible for:

• Recommending an appropriate asset allocation

• Evaluation & selection of securities within each asset class

• Implementation of the strategy through trading & rebalancing

• Monitoring portfolio performance & drift to make changes as necessary

The QASL will provide custody services and is responsible for rendering a monthly
financial report for Ms. Emily. The report shall be considered to be the official record for
the account and shall be the basis for the risk review to be performed by the QASL.

b. The Client

Ms. Emily Do is responsible for reporting any material changes in financial

circumstances or goals to the QASL in a timely manner. Any necessary revisions to the
Investment Policy Statement will be made in response to such changes, and the updated
Investment Policy Statement will be reviewed with Ms.Emily Do.

2.3. Procedures

The QASL is responsible for monitoring the investing requirements of Ms. Emily Do as
well as monitoring investment and economic issues, and Ms. Emily Do is responsible for

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suggesting changes to the IPS as necessary. The Advisor company shall review the IPS
with Ms. Emily Do no less frequently than annually.

At least annually, The QASL Financial Advisor shall review the asset allocation of Mrs.
Emily Do and suggest revisions for final approval by Ms. Emily Do. The asset allocation
plan shall consider the proportions of investments in stocks. The QASL shall consider
expected returns and correlations of returns for a broad representation of assets in the stock
markets and consider anticipated changes in the rate of inflation and changes in marginal
tax rates.

As investment adviser, QASL is responsible for using the investment policy statement
prepared as a basis for evaluating that the risk profile of the Ms. Emily Do account is
consistent with the risk management policies approved and adopted by Ms. Emily. QASL
shall be responsible for identifying variances in risk positions that exceed tolerable limits
as specified in the risk management policies and shall take prompt corrective action. No
less than quarterly, QASL shall provide to Ms. Emily Do a report of all such variances in
the prior quarter.

2.4. Investment objectives

Emily has a moderate risk tolerance when it comes to investing. While she is open to
taking on some level of risk, she prefers to maintain a balanced portfolio that considers both
conservative and growth-oriented investments. Emily recognizes that investing involves
inherent risks, including the potential for loss of capital. However, she also understands that
higher levels of risk can be associated with the potential for higher returns. Therefore, she
seeks to strike a balance between risk and reward in her investment strategy. As a moderate
risk-taker, Emily is willing to accept a certain degree of volatility in her investment
portfolio. She understands that short-term market fluctuations are normal and that staying
invested over the long term can help smooth out those ups and downs. However, she also
wants to avoid excessive risk that could jeopardize her capital or financial stability.
Therefore, Emily chooses to diversify her investments across different industries to manage
risks.

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 The investment program governed by the IPS is intended to supplement the earned
income of Ms. Emily Do in accumulating wealth and to provide funds upon her
homeownership by 2033. The financial plan developed for Ms. Emily Do in 2023 indicates
a required real growth rate of 15 percent to satisfy her future obligations and allow her to
own a house in 2033 as planned. QASL, on behalf of Ms. Emily Do will invest in the
Vietnamese stock market. The following benchmarks have been selected for comparison
with each asset class: VN30-index, HNX-index. An asset allocation plan shall be subject to
periodic review and change. For each asset class, a target allocation has been established
that reflects the optimized asset allocation study conducted by the QASL company as
investment adviser; also established are allowable ranges within which actual allocations
to each asset class may vary. The investment adviser is responsible for adhering to the asset
allocation plan and for maintaining actual allocations to asset classes within the ranges
established. Each quarterly report by the investment manager to the trustee shall confirm
actual asset allocations as of the end of the quarter and shall also confirm that allocations
during the quarter were within allowable ranges.

Ms. Emily Do understands that the very nature of risk is uncertainty about the future—
specifically, uncertainty as to future investment returns. The QASL seeks to generate
investment returns that are proportional to the risks assumed in Ms.Emily Do’s portfolio.
QASL, as investment adviser, seeks to implement an investment strategy that balances the
need to build Ms. Emily Do assets as stated in the objectives identified in the Financial Plan
with the risks associated with that strategy. Based on the 12 October 2023 Risk Assessment
interview with Ms. Emily, Tower Capital understands that an absolute loss in any 12-month
period of more than 10 percent is intolerable. At that threshold, therefore, policies and
procedures to minimize risk of further loss should be implemented by QASL.

2.5. Investment constraint

Emily's time horizon of 10 years for wealth accumulation and homeownership indicates
that she has a medium to long-term investment horizon. This time frame allows her to
pursue both her goal of accumulating wealth and saving for homeownership. With a 10-
year time horizon, Emily has the opportunity to take advantage of compounding returns
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and potentially higher growth investments. This longer time frame allows her to weather
short-term market fluctuations and benefit from the potential growth of her investment
portfolio over time. Emily's time horizon aligns well with her goal of homeownership. Over
10 years, she can save for a down payment and potentially accumulate enough funds to
purchase a property. By investing her savings wisely, she can strive to generate returns that
will contribute to her goal of becoming a homeowner.

2.6. Tax purpose

With an expected return of 15% per year and a moderate risk tolerance, Emily may aim
to optimize her tax efficiency. The Vietnamese stock market currently implements a flat
tax rate of 0.1% on the transaction value, regardless of the net profit from securities within
the fiscal year. And stock dividends are subjected to 5% personal income tax. As Emily
wants to optimize her tax payments in the context of investing in Vietnamese stocks, here
are some strategies she can consider:

• Long-term Investing: Holding stocks for more than one year in Vietnam may qualify
for a lower tax rate on capital gains. By adopting a long-term investment approach,
Emily can potentially benefit from reduced tax liabilities when realizing gains.

• Tax-Loss Harvesting: If Emily has investments that have experienced losses, she
may consider selling them to offset capital gains from other investments. This
strategy of tax-loss harvesting can help reduce her overall taxable income.

For example, Emily may have a loss of $100,000 from stock A. At the same time, she
also holds stock B, which has a profit of $150,000 and is unlikely to increase significantly.
By employing this strategy,Emily can sell the profitable stock, resulting in taxable profits
of only $50,000 for the year. If she were to hold onto the stock and sell it the following year
without any losses, she would have to pay taxes on the $150,000 profit or more.

• Dividend Reinvestment Plans: If Emily receives dividends from her Vietnamese

stock investments, she may consider enrolling in dividend reinvestment plans
(DRIPs). By reinvesting dividends back into the stock, she can potentially defer
taxes on those dividends until she sells the shares.

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2.7. Income needs

Emily has a stable income from her full-time job, which covers her living expenses.
However, she is interested in generating additional income from her investment portfolio
to supplement her savings and potentially fund future goals. She may prioritize investments
that offer regular income streams, such as dividend-paying stocks or bonds.

2.8. Liquidity needs

While Emily doesn't have immediate liquidity needs, she wants to maintain some level
of liquidity in her portfolio. This allows her to handle any unforeseen expenses and take
advantage of potential investment opportunities that may arise. She may allocate a portion
of her portfolio to relatively more liquid assets, such as short-term bonds, to ensure
accessibility when needed.

2.9. Investment guidelines

A. The Finance/Investment Committee should review investment activity on a regular

basis.

B. In the event a Committee member steps down from the Finance/Investment

Committee, he/she is responsible for communicating this action to the other Committee
members and the Investment Consultant/Manager. They will be removed as an authorized
individual immediately.

C. Accounts such as interest-bearing checking accounts, money market accounts,

certificates of deposit, investment-grade commercial paper, government securities, and
publicly traded mutual funds are to be the primary investments. Investing in any other type
of investment vehicle requires prior recommendation by the Finance/Investment
Committee and approval by the Board of Directors.

D. Within guidelines, maximum interest rates shall be sought, with the maturity of the
investments governed by expected cash needs.

E. All securities are to be written in the name of Mrs.Do

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2.10. Evaluation and review

Portfolio performance evaluation is available through quarterly reports, and ongoing

meetings with advisors. We urge you to review these reports and compare them against
official custodial records. Our evaluations will measure the portfolio’s performance against
the following benchmarks:

Equities: VN-index

Any of the following shall trigger a review of the IPS:

1. A change to the organization’s Investment Objectives.

2. In the absence of any change to the organization’s Investment Objectives, the IPS
should be reviewed at least annually.

II. Execution

1. Market overview

The global economy weakens, experiencing unpredictable fluctuations, with negative

impacts on Vietnam.

In 2023, the Vietnamese economy has traversed three-quarters of its journey amid the
world economy's bleak prospects. Global growth decelerates due to tightened monetary
policies, and the ongoing conflict in Ukraine continues to weigh on economic activities.

The already complicated global economy is becoming much more unstable due to
financial problems in the US and Europe. For the first time in history, the amount of the US
national debt has reached the $32 trillion mark. Governments must keep enforcing stricter
fiscal policies in tandem with growing public debt. This reduces global demand, negatively
affecting economies with growth strategies based on exports, such as Vietnam.

The turnover of some major export product groups of Vietnam, essential consumer goods
with low value in foreign households' expenditures, sharply decreased: Phones and
components decreased by 13.4%; footwear decreased by 18.2%; wood and wood products
decreased by 21.3%; aquaculture decreased by 21.7%; textiles and garments decreased by
12.1%; bags, wallets, umbrellas, hats decreased by 10.4%.
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Vietnamese businesses are grappling with numerous challenges in the tough economic
conditions.

In the first nine months of 2023, business operations faced myriad difficulties, with a
decline in orders. Businesses are now inactive and at a disadvantage when it comes to
accessing export markets due to the growing tendency of trade remedy investigations
against Vietnamese goods. By the end of June 2023, Vietnam's exports had to contend with
231 trade remedy cases initiated by other countries, with anti-dumping lawsuits leading the
way at 128 cases, accounting for 55.4%.

The power shortage from late May to mid-June 2023 due to a heatwave posed additional
challenges for businesses. The World Bank estimated that Vietnam's economy suffered
approximately a 0.3% GDP loss, equivalent to $1.4 billion, due to the power shortage. The
limited investment in transmission infrastructure and power grids in recent times is
evidence that we are causing difficulties for businesses, impacting the country's growth
potential.

Alongside a decrease in orders and a lack of product consumption markets, businesses

are facing capital shortages. Corporate bonds reaching maturity, bank loans nearing
repayment dates, delayed tax refunds, and slow cash inflows have left many businesses
struggling, causing production to stagnate.

The Government consistently accompanies businesses amid economic challenges.

In the first nine months of 2023, the Government has implemented flexible monetary
and fiscal policies, tailored to the developments and practical situations in the domestic,
regional, and global economies.

The government is focused on implementing the public investment disbursement plan,

fostering growth, and is painstaking in addressing concerns.

The disbursement picture of public investment in the first 9 months has many bright
spots. Many key projects, inter-regional projects with a spreading impact, are being rapidly
implemented, reflecting the significant efforts of the Government, the Prime Minister,
central ministries, and local authorities in implementing public investment disbursement.
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 In the third quarter of 2023, many newly launched projects for the year have completed
investment procedures, started implementation, signaling a breakthrough in public
investment disbursement activities for the remaining months of the year. This is the basis
for central ministries, agencies, and localities to achieve the target of disbursing 95% of
this year's public investment plan, compensating for the low growth of some industries
affected by the global economic downturn, contributing to achieving the maximum
economic growth target for 2023 approved by the National Assembly.

Foreign direct investment (FDI) in Vietnam in the first 9 months of 2023 is a bright spot
for the economy amid the decline in international investment and trade. The realized FDI
capital in the first 9 months reached $15.9 billion, the highest realized capital for the first 9
months in the 5-year period from 2018 to 2023, an increase of 2.2% compared to the same
period last year. This year, more than 50 American corporations, including many large
technology corporations, have come to explore the investment and business environment
in Vietnam.

The results of attracting and implementing FDI capital in the first 9 months of 2023 show
that foreign investors are putting their trust in the growth prospects, investment
environment, and economic position of our country. Many corporations see Vietnam as
having many opportunities to become a center in the global supply chain. The world
community recognizes Vietnam's important role in promoting international trade and
commits to expanding investment in Vietnam in the coming time.

The economy overcomes difficulties, regains growth momentum.

Through innovative thinking, swift actions prioritizing government directives, and a

proactive approach marked by calm confidence, our country's economy has successfully
surmounted challenges. The effective collaboration with the National Assembly, timely
policy implementations, and the dynamic spirit of the business community have propelled
economic recovery, with a 4.24% GDP increase in the first 9 months compared to the
previous year, ensuring macroeconomic stability and overall equilibrium.

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 In the growth picture, the agriculture, forestry, and fisheries sector increased by 3.43%,
providing a solid foundation for the economy, playing a crucial role in the $21.68 billion
trade surplus in goods for the first 9 months, ensuring an adequate supply of food at stable
prices as the foundation for controlling the average inflation rate for the first 9 months at
3.16%, forecasting the average inflation for the whole year of 2023 to be around 3.5-4%,
lower than the target approved by the National Assembly, creating room for adjusting prices
of goods managed by the state.

The results of economic growth in the first 9 months of 2023 reflect that growth is being
driven, setting the stage for a faster economic recovery in the fourth quarter of 2023 and
higher growth in the coming year.

2. Assets allocation

Moderately conservative investors adopt an investment approach that balances the

pursuit of returns with a cautious attitude toward risk. These individuals seek a middle
ground between the desire for capital growth and the preservation of their invested funds.
Unlike risk-neutral investors, those with a moderately conservative stance prioritize
protecting their capital to a certain extent while still aiming for reasonable returns.

One key characteristic of moderately conservative investors is their preference for a

diversified portfolio that includes a mix of assets with varying risk levels. This
diversification strategy helps mitigate potential losses during market fluctuations while
allowing for some exposure to higher-returning investments. Fixed-income securities,
such as government bonds, are often favored for their stability and predictable returns,
providing a foundation of security in the investment portfolio. Equity investments are also
considered, with a focus on blue chip stocks known for their stability and reliable growth.
Moderately conservative investors may allocate a portion of their portfolio to these
established companies, balancing the potential for capital appreciation with the desire for
reduced volatility. Additionally, cash investments, including certificates of deposit and
money market funds, play a role in the portfolio by providing liquidity and serving as a
buffer against market uncertainties. This cautious approach allows moderately

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conservative investors to navigate market dynamics with a degree of resilience, ensuring
a measured response to potential risks.

In essence, this approach reflects a thoughtful consideration of risk while maintaining

a focus on achieving moderate, sustainable returns.

In this case, our team would recommend investing in the following asset classes:

2.1. Cash investments

• Definition

Cash investments, also called cash equivalents, are short-term investments that earn
interest, which usually take a period of 90 days or less. Cash investments include various
instruments such as bank certificates of deposit, savings accounts, and money market
mutual funds. These investments are characterized by the preservation of principal and
liquidity, allowing investors to access their funds without the risk of loss. For example, if
one invests $1,000 in a cash equivalent, he/she can expect to get $1,000 back, and perhaps
some interest as well. If one invests $1,000 in stock, he/she might be able to sell his/her
shares for more than $1,000, but he/she might also have to sell for less. Although cash
investments may not offer high returns compared to riskier assets, as part of the overall
portfolio, cash investments can provide a buffer against fluctuations in the value of more
volatile assets, such as stocks. Keeping a limited amount of portfolio in cash equivalents
also lets one take advantage of new investment opportunities as they arise. And one can use
cash investments as part of the emergency fund to cover unexpected expenses.

• Advantages

Maintaining cash as a strategic position in a portfolio serves multiple purposes.

Firstly, it ensures liquidity for emergencies such as health expenses or potential job loss
and near-term obligations. Liquidity is extremely important here, so don’t invest money
reserved for near-term obligations in the stock market. Instead, keep it in cash, cash
investments, or shorter-term investments with minimal principal risk between now and
when you need to spend the money. For Ms.Emily who is still working, she might need to
prepare for emergencies such as parents’ medical costs, job loss or changing renting prices.
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It may make sense to set aside some money to cover unexpected expenses and limit the
potential need to sell from the portfolio at an inopportune time.

Secondly, having some percentage of the portfolio in cash can allow her to take
advantage of investment opportunities as they arise. A cash allocation may come in handy
if she wishes to overweight or underweight certain asset classes in the portfolio based on
the outlook for the markets. In addition, a cash allocation can provide flexibility when it’s
time to rebalance the portfolio and/or pay investment fees. The liquidity provided by
holding cash presents the opportunity to make purchases using a dollar-cost averaging plan.
The key benefit of dollar-cost averaging is more shares are bought when prices are low,
while higher prices result in purchases of lower share amounts, which reduces the average
cost per share. Subsequent purchases can either be made on a regular schedule, on price
declines or based on company developments.

Thirdly, there is a need for diversification. Bonds are the traditional go-to asset for
diversifying a stock portfolio and reducing overall risk of losses. These days, many
investors are using a combination of bonds and cash to help stabilize investment portfolios
over time. For this role, cash investments are meant to be the most defensive part of a
portfolio. Cash investments usually offer the lowest potential returns when compared with
the other types of investment prevailing in the market. However, in the meantime, they also
provide investors with investments having the lowest risks. Thus, it plays an essential role
in constructing a diversified portfolio as well as complementing assets having a higher risk
in the portfolio.

• Disadvantages

Along with the different advantages, cash investment also has some limitations and
drawbacks.

The primary disadvantage of the cash investment relates to the overall rate of return that
the investment gives. These investments are safe, so they don’t provide as much return as
risky investments. The less the risk was undertaken, the less the return on investment will
be. Due to this, a huge amount of time the investor is spending on identifying his exact cash

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requirement. As the return on the cash investments are much less, so investors keep
identifying the amount of cash they need from time to time so that their money does not lie
idle.

Additionally, some of the deposits have fixed tenure, and in case the investor decides to
withdraw his money mid-term, he usually has to forgo the interest payments and, at the
same time, may also be required to pay some amount fee for early withdrawal.

2.2. Equity

• Definition

Equity investment involves purchasing shares or ownership stakes in a company,

making the investor a partial owner. Equities do not provide guaranteed income, and their
returns are subject to market fluctuations. However, they present an opportunity for
capital appreciation and participation in a company's success. For moderately
conservative investors, blue chip stocks are recommended due to their lower risk profile.
Blue chip companies, often well-established and resilient, offer less volatility, reliable
growth, and stable returns. Diversifying equity investments between large, stable
corporations and smaller companies with growth potential can contribute to a balanced
portfolio.

The stock market is an important part of the capital market as well as in the financial and
economic system of Vietnam. Over the past time, Vietnam's stock market has become a
medium and long-term capital channel for the economy, reducing capital pressure on the
banking system. The performance of listed companies improved. After more than 20 years
of operation, Vietnam's stock market has had a relatively strong development. In 2017,
derivative products began to be deployed on the Vietnamese stock market, contributing to
bringing the capitalization of the stock market to over 70% of GDP. In 2019, covered
warrant products were also officially added to products in the stock market. The bond
market has also gradually developed, actively contributing to capital mobilization activities
of enterprises as well as an effective tool to help the government implement economic
policies. In 2022, Vietnam's stock market left many impressions. On January 6, 2022, VN-

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Index closed above 1,500 points for the first time in its history, with a market capitalization
of over VND 6 million billion. However, in April 2022, the market started to correct and
there were times when the VN-Index fell below 1,000 points. Besides, the market also
revealed many limitations: quantity of goods on the market, intermediary organizations in
the market, corporate bond market, inspection and supervision activities.When the world
economy has many fluctuations, it has had a significant impact on the domestic market.

For Vietnam, three indexes including VNIndex, HNX Index and UpCom Index represent
share price indexes of stocks traded at the Ho Chi Minh City Stock Exchange, Hanoi Stock
Exchange and UpCom stock exchange. The listing requirements on HOSE are stricter than
those of the Hanoi exchange. HOSE-listed companies usually have better disclosure and
are more willing to meet investors, both of which are important to foreigners. In contrast,
local speculators prefer the Hanoi exchange, partly because of its wider daily trading band.
The listing and disclosure requirements on UPCOM are less stringent than the other two
exchanges as it was intended for companies (including privatized SOEs) that are on the way
to being listed on the HCM or Hanoi exchanges.

• Advantages

Stock investment offers investors plenty of benefits.

First of all, investors can take advantage of a growing economy. That means there is
potential for large gains. As the economy grows, so do corporate earnings. In real life,
stocks have the potential to deliver significant gains and generate substantial wealth over
time. Some stocks have experienced tremendous growth, leading to substantial returns for
investors.

Secondly, there is limited potential loss. When purchasing stocks with cash, the potential
loss is limited to the total amount of the initial investment. This means that if the value of
the stock decreases, the maximum loss is the amount initially invested. This limited
downside risk can provide a level of security for investors, especially when compared to
other investment options that may involve more significant potential losses.

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 Thirdly, the stock market allows investors to sell stock at any time. Stocks are generally
highly liquid, meaning they can be bought and sold quickly on stock exchanges at their fair
market price. This liquidity provides investors with the ability to enter or exit positions
easily, allowing them to take advantage of market opportunities or manage their investment
portfolios according to their needs.

Last but not least, over the long term, stocks have historically offered high returns
compared to other types of investments, such as bonds or savings accounts. While past
performance is not a guarantee of future results, the historical performance of stocks
suggests the potential for attractive returns over time.

• Disadvantages

However, stocks have some distinct disadvantages of which individual investors should
be aware of.

Firstly, stock prices can be risky and volatile. They can fluctuate rapidly, often
influenced by various factors such as company policies, economic conditions, market
sentiment, and news events. Individual investors typically do not have direct control over
these factors, making it challenging to predict or influence stock price movements.

Secondly, while investing in stocks represents ownership in a business, stockholders are

last in line to receive payments. Before distributing profits to shareholders, a company must
fulfill its obligations to employees, suppliers, creditors, taxes, and other expenses. If a
company faces financial difficulties or declares bankruptcy, shareholders may not receive
any or only a portion of their investment back, as other stakeholders have priority in the
payment hierarchy. While investors in public companies are owners, they do not enjoy all
the rights and privileges that owners of private businesses have. For example, they may not
have direct control over strategic decisions or day-to-day operations of the company.
Shareholders typically exercise their ownership rights through voting on major corporate
matters, such as electing directors or approving mergers and acquisitions. However,
individual investors may have limited influence due to the large number of shareholders
and institutional investors involved.

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 Last but not least, investors in public companies may not have access to all the
information about the company. Publicly traded companies are subject to certain disclosure
requirements, but not all information may be readily available to individual investors.
Limited information can make it challenging to make well-informed investment decisions,
as investors may not have a complete understanding of a company's financial health,
operations, or future prospects.

It's important for investors to be aware of these risks and limitations associated with
investing in stocks. Conducting thorough research, diversifying investments, and staying
informed about market and company developments can help mitigate some of these
challenges. Seeking advice from financial professionals and considering individual risk
tolerance and investment goals is also crucial when making investment decisions in the
stock market.

2.3. Recommended assets allocation

All things considered, we recommend asset allocation for client’s portfolio as follows:
The cash investment accounts for 17%, while equity constitutes 83%.

Figure 1: Assets Allocation

19
3. Recommendation portfolio

3.1. Cash investments

Since only 17% of the total amount- equivalent to VND 85.000.000 would be invested
in cash investments, we recommend that it should focus on: savings accounts. This amount
of cash then should be allocated to different saving accounts with different maturity. As
Ms. Emily wants to allocate 85,000,000 VND to different saving accounts with different
maturities to balance liquidity for emergencies and wealth accumulation, she could consider
the following allocation strategy:

Emergency Fund (Immediate Liquidity): Allocate a portion of the funds to a regular

savings account or a high-yield savings account that offers immediate liquidity. This
account should have no or minimal withdrawal restrictions, allowing her to access the funds
quickly in case of unexpected emergencies.

Short-Term Savings (1-3 years): Allocate another portion of the funds to a fixed-term
deposit account with a maturity period of 1-3 years. Fixed-term deposit accounts typically
offer higher interest rates compared to regular savings accounts. By choosing a maturity
period within the 1-3 year range, Emily can have access to the funds relatively soon if
needed, while also earning a higher interest rate than immediate liquidity accounts.

Long-Term Savings (3+ years): Allocate the remaining amount to longer-term

investment options that may offer higher potential returns over time. This could include
long-term fixed-term deposit accounts, certificates of deposit, or other investment products
offered by banks in Vietnam. These accounts would have longer maturity periods, such as
3, 5, or 10 years, and provide the opportunity for wealth accumulation and potentially
higher interest rates.

Basically, commercial banks in Vietnam could be classified into 3 groups:

- Big banks with more 50% state- ownership: Vietcombank, Agribank, Vietinbank, BIDV

- Reputed banks without state- ownership: Sacombank, VPBank, Techcombank, VIB,

MBBank, LienVietPostBank, ACB…

20
- Small banks: NCB, Vietcapital Bank, Viet Bank,…

The group of foreign banks is not recommended for savings deposits in Vietnam. This
is because they primarily invest in Vietnam to support personal and business loans and
other financial services, rather than attracting capital through savings deposits. As a result,
they may not offer favorable interest rates for savings deposits. Typically, State-owned
banks have a dense network of branches that are highly convenient for depositing and
withdrawing money. Additionally, these banks have high levels of credibility and safety.
However, one drawback is that the interest rates for savings deposits in these banks are not
as high as those offered by joint-stock commercial banks.

The table below shows the interest rates of 24-month deposit for online savings deposits
in banks as of November 2023:

Bank 1 3 6 9 12 18 24
month month month month month month month

ABBank 3,45 3,65 4,40 4,40 4,20 4,10 4,10

ACB 3,30 3,50 4,80 4,90 5,30 5,40 5,40

Agribank 3,00 3,30 4,30 4,30 5,30 5,30 5,30

Timo 4,40 4,70 5,50 – 5,70 5,80 5,80

Bắc Á 4,45 4,45 5,40 5,50 5,60 5,90 5,90

Bảo Việt 4,40 4,75 5,50 5,60 5,90 6,20 6,20

BIDV 3,00 3,30 4,30 4,30 5,30 5,30 5,30

CBBank 4,10 4,20 5,60 5,70 5,90 6,00 6,00

Đông Á 4,50 4,50 5,50 5,60 5,85 5,85 5,85

GPBank 4,25 4,25 5,20 5,30 5,40 5,50 5,50

21
Hong Leong 1,00 2,00 3,50 3,50 3,50 – 3,50

Indovina 3,65 3,80 5,30 5,50 5,80 5,90 5,90

Kiên Long 4,35 4,35 5,20 5,40 5,50 6,00 6,00

MSB 3,30 3,30 4,50 4,90 5,10 5,10 5,10

MB 3,40 3,70 5,00 5,10 5,30 6,00 6,50

Nam Á Bank 4,65 4,65 4,70 5,00 – 5,90 –

NCB 4,45 4,45 5,40 5,55 5,70 5,90 5,90

OCB 3,90 4,10 5,10 5,20 5,50 5,90 6,00

OceanBank – – – – – – –

PGBank 3,80 3,80 5,10 5,30 5,40 6,20 6,30

PublicBank 4,00 4,30 5,30 5,30 5,80 6,50 6,00

PVcomBank 3,95 3,95 5,60 5,60 5,70 6,00 6,00

Sacombank 3,50 3,70 5,10 5,40 6,00 6,20 6,30

Saigonbank 3,40 3,60 5,20 5,40 5,60 5,60 5,60

SCB 4,50 4,50 5,30 5,40 5,60 5,60 5,60

SeABank 4,00 4,00 4,60 4,75 4,90 5,10 5,15

SHB 3,60 3,90 5,20 5,40 5,60 6,10 6,10

Techcombank 3,25 3,55 4,85 4,90 5,25 5,25 5,25

TPBank 3,80 4,00 4,80 – – 6,00 –

22
 VIB 3,60 3,80 5,00 5,00 5,40 5,50 5,70

VietBank 3,80 4,00 5,30 5,40 5,70 6,30 6,30

VietCapitalBank 4,00 4,30 5,50 5,60 5,70 5,85 5,85

Vietcombank 2,80 3,10 4,10 4,10 5,10 – 5,10

VietinBank 3,00 3,30 4,30 4,30 5,30 5,30 5,30

VPBank 3,70 3,75 4,80 4,80 5,30 4,90 4,90

Table 1: Current interest rates for savings deposits in November 2023

Given the above information on interest rate, for the purpose of immediate liquidity
whose terms should be around 3 to 6 months, Ms. Emily can allocate large amounts of
money into a high-yield savings account, such as CBBank and Timo. These banks offer
competitive interest rates of 5.6% and 5.5% per 6 months, respectively, the interest rates
can be higher if it is executed online. CBBank is now a 100% state-owned bank and
therefore, provides a sense of security and stability as it is well-regulated and is part of the
government's financial infrastructure. Timo was Vietnam’s first and pioneering digital
banking platform. During seven years of operations, Timo’s efforts have been recognized
across multiple fronts, including being named The Best and Fastest Growing Digital Bank
inside and outside of Vietnam for many consecutive years, awarded by many reputable
organizations like Asia Money, The Global Economics. In 2021, Timo was named “Best
Customer-Centric Digital Bank in Vietnam” by Global Brands Magazine and also
recognized as HR Asia’s “Best Companies to work for in Asia 2021”. Timo has further
achieved “Gold Quality Service for Consumers benefit 2022”, as well as being a part of the
Top 50 FDI Enterprises in Vietnam in the category of “Leading Digital Banking Platform
in Vietnam” in 2021 and “Pioneering social banking and sustainable growth” in 2022 by
Golden Dragon Award. This bank is a reliable tool for customers’ financial journey.
Therefore, savings accounts in these banks might be perfect for a moderately conservative
portfolio like Ms. Emily’s portfolio.

23
 For short-term savings and long-term savings, Ms. Emily should consider investing in
reputable commercial banks. The fact they are not partially or totally owned by SBV, to
attract more customers, their interest rates offered may be higher than those provided by
Big 4. Most banks in group 2 are also well-known for their efficient operating activities,
high annual revenue and friendly services, which gives all customers a sense of safety when
depositing their money in these banks. Additionally, these banks are still under strict control
of SBV. In case of any bank’s failure, SBV will always offer alternatives to support these
banks in order to avoid systematic default. Therefore, depositing money in any banks of
Group 2 might be considered relatively safe. Over the course of 2 years, Ms. Emily can
allocate the remaining cash in MB bank with the most attractive interest of 6.5%. Emily
also wants to accumulate wealth over time, therefore, we recommend her to invest in a
fixed-term saving of 5 years. She can consider MB Bank whose 5 year interest rate is 6.5%.
MB Bank is also a prestigious bank in Vietnam Report's Top 5 Most Reputable and
Efficient Public Companies for 2023, therefore, Ms.Emily will not have to worry about
bankruptcy.

The recommended investment would be:

Amount Bank Term Rate of return

30.000.000 Timo 6 month 5.50%

25.000.000 MB 2 year 6.50%

30.000.000 MB 5 year 6.50%

Table 2: Recommended cash investment

Group 3 consists of small banks such as NCB, Vietcapital Bank, VietBank ... Interest
rates are the biggest advantage of these banks when the interest rates of 1- year term
deposits here are higher than big 4 and other big joint stock commercial banks. However,
the downside is the small size and little reputation. Thus, we decided not to put any
money in this group due to their inconvenience and lack of safety.

24
3.2. Stock market

a. Securities analysis

During the research, our team has found out that Blue chip stocks are suitable for your
conservative portfolio. Blue chip stocks may not always seem like a good short term
investment, but in the long run, it creates high value due to the steady growth and returns.
It has the capability to quickly recover from distress because of their strong financial base.
Even a newbie will have a positive cash flow if they invest in blue chip stocks. They are
a must in a portfolio, not only for new investors but also even for experienced market
players.
• HPG
Starting as a construction machinery trading company in August 1992, Hoa Phat
gradually expanded into various sectors. They ventured into Interior Decoration in 1995,
Steel Pipes in 1996, Steel in 2000, Refrigeration and Electronics in 2001, and Real Estate
in 2001. In 2007, Hoa Phat underwent a restructuring process to form a conglomerate
structure. Hoa Phat Corporation Joint Stock Company became the parent company,
overseeing its subsidiary and affiliated companies. Hoa Phat Group is the leading industrial
manufacturing group in Vietnam. Over 80% of revenues relate to steel production, where
they have a large market share of above 30%, with aims to get to 40%.

As the overall economic situation gradually recovers, business activities are expected to
become less challenging, particularly for real estate businesses. Export and processing
orders, which had severely declined earlier, are showing initial signs of recovery, with some
orders returning. Domestic inflation is well under control, and external pressures from the
US Federal Reserve are not as significant as before, leading to less exchange rate pressure.
This, in turn, helps control interest rates in a downward direction to support economic
development. The real estate sector is actively addressing its challenges with positive
solutions, and the worst of the situation has passed. There is a strong push for disbursement
of public investment to build economic and social infrastructure, creating a favorable
environment for economic development, job creation, and GDP growth.

25
 In the newly published report, SSI Research has adjusted the net profit forecast for Hoa
Phat (HPG) in 2023 from more than 7,000 billion VND to 5,950 billion VND (down nearly
30% over the same period). The reason for lowering the profit forecast is that the average
steel price is adjusted down 2% and coke price is adjusted up 3% this year. Thus, according
to analysis department estimates, Hoa Phat will record a net profit of more than 2,100
billion VND in the fourth quarter of 2023, much better than the loss of nearly 2,000 billion
VND in the same period last year. Specifically, Hoa Phat's net profit reached VND 2,000
billion, an increase of 38% compared to the previous quarter, and showed a significant
improvement compared to the loss of VND 1,786 billion in the same period last year.

This stock now has the price per share of VND 32,000. Fundamentally, HPG is
reasonably priced with a P/E ratio of 140.82 and a dividend yield of 1.6%.

We would like to recommend you spending around VND 120,000,000 to buy HPG stock
for following reasons: The leading position in the steel industry thanks to low production
costs will be the first to benefit when the industry cycle recovers. Steel prices have bottomed
and will recover from 2024 while raw material prices are on a downward trend, which will
positively impact gross profit margin. The low interest rate environment and stable
exchange rate helped financial costs decrease by more than 40% over the same period.
Moreover, Dung Quat 2 complex will be operational from the end of 2025 and will be a
long-term growth driver.

• PNJ

Phu Nhuan Jewelry Joint Stock Company (PNJ) originated from the Phu Nhuan Gold
and Silver Business under the People's Committee of Phu Nhuan District, established on
April 28, 1988. PNJ specializes in the production and sale of jewelry made of gold, silver,
and gemstones. The company officially adopted the model of a joint-stock company in
2004. PNJ currently manages and operates the PNJ Jewelry Company with a total
investment of 120 billion VND and a production capacity of over 4 million products per
year.

26
 PNJ holds a dominant position in the retail gold, silver, and jewelry market. With over
33 years of brand building and market presence, PNJ has captured more than 50% of the
jewelry market. The company's nearly 350 stores across the country have solidified its
brand with consumers.

Moreover, for macroeconomics, the middle-class in Vietnam is on the rise, with more
and more people joining this group. According to the World Data Lab research company,
over 1 billion people in Asia are expected to enter the middle-class by 2030, and Vietnam
will see an additional 23.2 million people, reaching a total of 56 million. The middle-class
is defined as households with daily expenditures ranging from $11 to $110. This rapid
growth of the middle-class translates to increased disposable income, leading to a higher
demand for luxury products like gold and silver jewelry.

The population structure in Vietnam currently provides an abundant source of affordable

labor. Experts predict that the period of the "golden population structure" in Vietnam will
end in 18 years, and the aging of the population will accelerate from 2040 onwards. During
this time frame, the ample labor force will be a strength, driving robust economic
development. Additionally, the young working-age population is also a segment with
significant spending power for luxury items, including gold and silver jewelry.

Experts expect that in 2023, PNJ will continue its growth momentum with a larger
market share and stronger brand, with the expectation that revenue over net profit will
increase by 17.4/19.4% over the same period. Most financial experts recommend BUYING
PNJ shares in the period 2023 - 2024, forecasting that total profit after tax will increase by
17%, retail revenue will increase by 33% due to increased customer demand, especially the
upper middle income class.

This stock now has the price per share of VND 76,600 and also a P/E ratio of 12.81. We
recommend buying and changing the target price of PNJ to 83,800 VND/share (+16% price
increase, using discounted cash flow method). Price driving factors such as: Benefiting
from the continued growth of the middle class in Vietnam, expanding market share in the
retail sector, innovation, restructuring, digital transformation, and implementing various
programs to expand the customer base.
27
 • VCB

Vietcombank officially operated as a joint stock commercial bank on June 2, 2000. On

June 30, 2009, Vietcombank (VCB) shares were officially listed on the Ho Chi Minh City
Stock Exchange.

Over 50 years of construction and growth, Vietcombank has made important

contributions to the stability and development of the country, promoting its role as a key
foreign bank, creating important impacts on the regional and world financial community.
From a specialized bank serving foreign economic affairs, Vietcombank has become a
multi-functional bank, providing leading financial services in the field of international
trade; along with traditional activities such as capital trading, credit, capital mobilization,
project financing... as well as modern banking services: foreign currency trading and card
services, electronic banking…

A fundamental analysis of VCB stock is a key component of determining whether it's

worth buying. Total operating income in the first 3 months of the year increased by 10.7%
over the same period, with the main driver coming from net interest income increasing by
18.6%. In addition, non-interest income decreased by 9.3% over the same period, with the
main cause coming from the decline in card services (down 22% over the same period) and
domestic payments (down 11% over the same period). ). Asset quality is stable. Although
the bad debt ratio and group 2 debt both increased again in the first quarter, we believe that
the increase in bad debt ratio is still under control and the bank has also prepared for
previous provisions. NIM in the first quarter of 2023 continues to be stable, showing VCB's
good profitability. The bank has total assets reaching 1,846,431 billion VND. Total
outstanding credit increased by 2.5% in the first 3 months of the year, reaching nearly
1,184,687 trillion VND.

At the current price of 92,800 VND/share, we recommend purchasing VCB shares for
the amount of 124 million VND.

28
Conclusion

For short-term trading, blue chip stocks are not at all a suitable option, since they are less
volatile and have slow growth. However, for the investors who are risk averse and look
forward to putting in their money in big brands with the aim of earning stable returns over
a long period of time can benefit from investing in these stocks.

b. Optimal stock portfolio

To come up with the optimal portfolio, we follow these steps:

Step 1: Collect historical data for the last 3 years (2020-2023) of the stock price of HPG,
VCB and PNJ

Step 2. Calculate expected return, variance, correlation and covariance among stocks.

HPG PNJ VCB

MEAN (DAILY) 0.0850% 0.0671% 0.0526%

MEAN (YEARLY) 21.2564% 16.7692% 13.1439%

VARIANCE 0.0006053 0.0003925 0.00033

STD.DEV 0.0245873 0.0197981 0.0181389

Table 3: Mean, variance and standard deviation of three stocks

COVARIANCE (YEARLY) HPG PNJ VCB

HPG 0.1511333 0.0447489 0.040696

PNJ 0.0447489 0.0979907 0.0263714

VCB 0.040696 0.0263714 0.0822547

29
 CORRELATION HPG PNJ VCB

HPG 1 0.3677138 0.3649989

PNJ 0.3677138 1 0.2937382

VCB 0.3649989 0.2937382 1

Table 4: Covariance and correlation of three stocks

Step 3. Using Solver to plot the portfolio frontier

• Set objective: variance of portfolio

• To: Min

• By changing variable cells: weight of 3 stocks

• Subject to constraints:

• Return of the portfolio = target return ( running from 13.14% to 21.26%)

• 0 < weight < 1

• Total weight = 1

Result:

We have output from solver for plotting the portfolio frontier:

30
X axis = SD Y axis = E[r] Weights

St.Dev E[r] HPG PNJ VCB

28.68% 13.14% 0.00% 0.00% 100.00%

25.09% 14.00% 0.00% 23.62% 76.38%

23.77% 15.00% 6.11% 37.53% 56.36%

23.64% 15.52% 12.35% 38.02% 49.63%

23.75% 16.00% 18.01% 38.47% 43.51%

24.67% 17.00% 29.92% 39.42% 30.66%

26.45% 18.00% 41.82% 40.36% 17.82%

28.92% 19.00% 53.73% 41.31% 4.97%

32.26% 20.00% 72.00% 28.00% 0.00%

37.35% 21.00% 94.29% 5.71% 0.00%

38.88% 21.26% 100.00% 0.00% 0.00%

Table 5: Output from solver for plotting the portfolio frontier:

31
 Figure 2: Efficient frontier

Step 4. Find optimal portfolio

In constructing portfolios, investors often combine risky assets with risk-free assets
(such as government bonds) to reduce risks. A complete portfolio is defined as a
combination of a risky asset portfolio, with return Rp, and the risk-free asset, with return
Rf.

The expected return of a complete portfolio is given as: E(Rc) = wpE(Rp) + (1 − wp)Rf

The variance and standard deviation of the complete portfolio return is given as:
Var(Rc) =𝑤𝑝2 Var(Rp), σ(Rc) = wpσ(Rp), where wp is the fraction invested in the risky
asset portfolio.

While the expected excess return of a complete portfolio is calculated as: E(Rc) – Rf,

if we substitute E(Rc) with the previous formula, we get wp(E(Rp) − Rf).

The standard deviation of the complete portfolio is σ(Rc) = wpσ(Rp), which gives us:
wp = σ(Rc)/σ(Rp)
32
 Therefore, for each complete portfolio:

𝐸 (𝑅𝑐 ) − 𝑅𝑓 𝐸 (𝑅𝑝) − 𝑅𝑓
=
σ(Rc) σ(Rp)
𝐸(𝑅𝑝)−𝑅𝑓
Or E(Rc) = Rf + Spσ(Rc), where Sp =
σ(Rp)

The line E(Rc) = Rf + Spσ(Rc) is the capital allocation line (CAL). The slope of the line,
Sp, is called the Sharpe ratio, or reward-to-risk ratio. The Sharpe ratio measures the increase
in expected return per unit of additional standard deviation. The optimal risky asset
portfolio is at the point where the CAL is tangent to the efficient frontier. This portfolio is
optimal because the slope of CAL is the highest, which means we achieve the highest
returns per additional unit of risk. With the risk-free rate 2.828%, we try to determine the
point where the Sharpe ratio is highest for our portfolio:

Portfolio weight PORTFOLIO STATISTIC

HPG PNJ VCB St.Dev E[r] Sharpe ratio

0.00% 0.00% 100.00% 28.68% 13.14% 35.97%

0.00% 23.62% 76.38% 25.09% 14.00% 44.52%

6.11% 37.53% 56.36% 23.77% 15.00% 51.21%

12.35% 38.02% 49.63% 23.64% 15.52% 53.71%

18.01% 38.47% 43.51% 23.75% 16.00% 55.47%

29.92% 39.42% 30.66% 24.67% 17.00% 57.44%

41.82% 40.36% 17.82% 26.45% 18.00% 57.36%

53.73% 41.31% 4.97% 28.92% 19.00% 55.91%

72.00% 28.00% 0.00% 32.26% 20.00% 53.23%

33
 94.29% 5.71% 0.00% 37.35% 21.00% 48.65%

100.00% 0.00% 0.00% 38.88% 21.26% 47.40%

Table 6: Sharpe ratio of the portfolio

Therefore, with approximately 30%, 39% and 31% invested in HPG, PNJ and VCB
respectively, we can achieve an optimal stock portfolio for Ms. Emily, with expected return
~ 17%, standard deviation ~24.67%. The graph below would illustrate this:

Figure 3: Capital allocation line

34
 The remaining amount 415,000,000VND can be allocated in stock like this:

HPG PNJ VCB

Weight 30% 39% 31%

Amount 124,500,000VND 161,850,000VND 128,650,000VND

Table 7: Recommended stock portfolio

c. Official Portfolio

In conclusion, we would like to recommend the portfolio for Ms,Emily as follow:

Assets Stock Amount (VND)

Cash investment Timo 30,000,000

MB 55,000,000

Blue Chip Stocks HPG 124,500,000

VCB 128,650,000

PNJ 161,850,000

Table 8: Official portfolio

III. Feedback

Our group invested in stocks on the Vietstock Securities Arena website on November
14th. There are some differences compared to our recommended portfolio due to the
volume unit permitted by the stock exchange. We purchased 1,500 shares of VCB at an
average price of 86,505 VND, 2,100 shares of PNJ at 77,398 VND, and 4,400 shares of
HPG at 27,432 VND.

35
 Table 9: Results on November 15th

Table 10: Results on November 16th

Table 11: Results on November 17th

Return %

Date VCB PNJ HPG Portfolio

15/11 1.38 1.94 0.25 1.27

16/11 -0.8 -1.14 -2 -1.28

17/11 -1.6 1.15 -1.67 -0.53

Table 12: Summary results

36
 Recorded here is our result from investing in the stock market after a period of time. The
return of the portfolio on November 15th is 1.27%. The return of the portfolio on November
16th is -1.28%. And the return of the portfolio on November 17th is -0.53%.

Based on the above data, we can calculate risk-adjusted returns, measuring volatility
through the standard deviation of daily returns, and comparing the portfolio's performance
to a benchmark.

Result Real data Benchmark - VN30

15/11 1.27% 1.15%

16/11 -1.28% 0.27%

17/11 -0.53% -2.16%

Average daily return -0.18% -0.25%

Standard deviation 1.07% 1.4%

Risk free rate 0.01% 0.01%

Sharpe ratio -17.76% -18.57%

Correlation 47%
Table 13: Comparison of results with benchmark

• Compared to risk free benchmark

The portfolio's daily returns for the time periods T+1, T+2, and T+3 were 1.27%, -1.28%,
and -0.53% respectively. The average daily return over these periods was -0.18%. The
standard deviation of the portfolio's daily returns was found to be 1.07%. The risk-free rate
used for the analysis was 0.01% (daily risk free rate calculated from annual risk free rate).
The portfolio's average daily return of -0.18% indicates that, on average, it has generated
negative returns during the analyzed time periods. The standard deviation of 1.07%

37
suggests that the portfolio's returns exhibited relatively high volatility or price fluctuations.
Comparing the portfolio's performance to the risk-free rate, it is evident that the portfolio
has generated lower returns than the risk-free alternative.

• Compared to VN30 index benchmark

The portfolio's average daily return of -0.18% exceeded the VN30 benchmark's average
daily return of -0.25%. This suggests that the portfolio, on average, outperformed the
benchmark in terms of daily returns. The excess return of the portfolio over the VN 30
index is approximately 0.067%. The portfolio's standard deviation of 1.07% was lower than
the VN30 benchmark's standard deviation of 1.4%. This indicates that the portfolio
exhibited lower volatility or price fluctuations compared to the benchmark. It appears that
the portfolio has outperformed the VN30 benchmark in terms of average daily return and
exhibited lower volatility. However, to be more specific, the portfolio outperformed the
benchmark on the first day (15/11) with a higher daily return of 1.27% compared to the
benchmark's return of 1.15%. However, on the second day (16/11) and the third day
(17/11), the portfolio's daily returns were lower than the benchmark's returns, indicating
underperformance for those days. There is a moderate positive correlation between the
portfolio and VN30 index, suggesting some degree of similarity in their performance.

• Analyzing the performance of specific stocks

Based on the analysis, the portfolio has demonstrated positive returns and exhibited good
risk-adjusted performance, as indicated by the high Sharpe ratio. However, the high
volatility suggests that the portfolio's returns have experienced significant ups and downs.
This was due to the fluctuations in the price of the stocks.

38
 Figure 4: Price fluctuations of three stocks through three days

From the graph, we can see that VCB had negative returns on both 16/11 and 17/11,
showing a decline in its stock price over those two days. Meanwhile, PNJ had a negative
return on 16/11 but a positive return on 17/11, suggesting a decline followed by a recovery
in its stock price. HPG had negative returns on both 16/11 and 17/11, signaling a downward
trend in its stock price over that period.

39
 Figure 5: Returns of three stocks through three days

On 15/11, all three stocks (VCB, PNJ, and HPG) had positive returns, contributing to
the positive performance of the portfolio, with PNJ being the main driver leading to a return
of 1.27%. On 16/11, the portfolio's return was -1.28%. The portfolio’s negative return was
influenced by the negative returns of all three stocks. On 17/11, PNJ experienced a positive
return. However, HPG and VCB had significant negative returns, leading to a negative
portfolio return of -0.53%. We can see that over the period, PNJ has been consistently a
strong performer, while HPG has underperformed. This suggests that PNJ is a strength in
our portfolio, while HPG is a weakness.

• Adjusting portfolio allocation

After analyzing, we consider the following adjustment to our portfolio. First of all, we
would certainly consider increasing allocation to strengths. Since PNJ has shown relatively
positive returns and contributed positively to the portfolio's performance, we may increase
allocation to PNJ. This adjustment would capitalize on the stock's strength and potentially
enhance the portfolio's overall returns. Secondly, we will reassess allocation to weakness.
Given that HPG has consistently shown negative returns and contributed negatively to the

40
portfolio's performance, we might reassess allocation to HPG. We would recommend
potentially decreasing or even removing HPG from the portfolio to reduce its impact on the
overall performance. Lastly, it's crucial to maintain a well-diversified portfolio to mitigate
risk. We also recommend exploring other stocks or asset classes beyond the current
holdings to diversify the portfolio. By adding different stocks or asset classes that have
shown strength or have a positive outlook, we can potentially reduce concentration risk and
improve the risk-return profile of the portfolio. However, further research should be
conducted in order to decide which stocks to include in our adjusted portfolio. The
performance of individual stocks can change over time, therefore, it's important to regularly
monitor the performance of the portfolio and make adjustments as needed. We will
continuously monitor the portfolio's performance after making the adjustments, as well as
repeat the feedback step regularly to evaluate the effectiveness of changes. If further
weaknesses or areas for improvement are identified, additional adjustments will be made
to optimize portfolio allocation.

41
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