Besides, investors in vietnamese stock market often over react with rumors and make quick decisions without scanning the information

INVESTMENT POLICY STATEMENTTarget clients: People who age from 35 to 50 Overall risk level: Moderate in relative to Vietnam stock market Asset allocation: 100% invested in stocks listed

CONTENT TABLE

INVESTMENT POLICY STATEMENT

FUNDAMENTAL ANALYSIS

I MACRO ECONOMY

II STOCK MARKET ANALYSIS

III INDUSTRY ANALYSIS

INVESTMENT POLICY STATEMENT

Target clients: People who age from 35 to 50

Overall risk level: Moderate in relative to Vietnam stock market

Asset allocation: 100% invested in stocks listed on HOSE

Objectives:

 Long term growth and capital preservation

 Level of risk: Conservative

 Short term liquidity needs: None

 Target return for portfolio: 7% (based upon historical rates of return)

Port folio selection guidelines:

In general, long term investment performance is determined by asset performance.Historically, stock assets offer higher rates of return along with greater volatility Fixed assetsgenerally yield lower rates of return, lower correlation with equities and less risk.Diversification across asset geography and size is recommended

Legal and regulatory issues:

Vietnamese stock market is still young and not yet well-regulated It is considered to be lack

of information transparency and the information, which is available, does not fulfill its tasks

in supporting investors to make accurate decisions Corporation may provide enough

information as required by law but not on time For example, corporation does not makeinformation public on the corporation’s website at the same time it sends those information

to State Securities Commission of Vietnam This causes inside information which destroysthe fairness in the market Besides, investors in Vietnamese stock market often over-reactwith rumors and make quick decisions without scanning the information

FUNDAMENAL ANALYSIS

I MACRO ECONOMY

After a sharp decline in 2018, the pace of global economic activity is still quite weak Thedriving force in manufacturing activity, in particular, has weakened dramatically, to a levelnot visible since the global financial crisis Increased trade and geopolitical tensions haveincreased uncertainty about the future of global trading system and internationalcooperation in general, losing confidence in global business and investment decisions Anoticeable change on the side of monetary policy that increased accommodation throughboth action and communication has reduced the impact of emotional stress and financialmarket activity, while a service industry typical cases have supported job growth Emergingmarket economy groups have partially driven the projected growth slowdown in 2019 andaccounted for the majority of the expected recovery in 2020 including those who havesuffered severe or ineffective stress compared to the previous average

The world economy is expected to grow at 3.0% in 2019 before recovering to 3.4 percent in

2020 A slightly higher growth rate is expected for 2021–2024 This global growth modelreflects a major recession and expected recovery in a group of emerging market economies

In contrast, growth is expected to moderate among a group of systematic economies likeEurope, United State, China, and Japan (Firgue 1).

Over the past 30 years, Vietnam has experienced significant changes in social and economicdevelopment Vietnam underwent the Doi Moi program, launched in 1986, the economy hasexperienced rapid growth and transformed from one of the poorest countries in the world

to a lower middle-income country

In the 21st century, Vietnam is in the process of integration into the global economy Most ofVietnamese businesses are small and medium enterprises (SMEs) Vietnam has become aleading agricultural exporter and an attractive destination for foreign investment inSoutheast Asia

In 2019, in the context of complicated fluctuations in the world and regional economies,Vietnam's economy is still on impressive growth momentum Vietnam's GDP grew at 7.02%

Despite high economic growth, the economy still ensures macro stability The consumerprice index is at 2.79%, ensuring the target of controlling the consumer index below 4% Thecurrent per capita income is about 2740 USD (if the economy scale is omitted, it is over 3000USD) which will narrow the gap with the high-middle-income country (according to theWorld Bank's 2019 price benchmark) of 3,996 USD Real GDP growth is forecast to remainrobust at around 6.9% in 2020 and 2021

The economic impact of the improved transportation system, along with a series of broad-basedeconomic reforms, became evident in the 2000s Average economic growth grew sharply by 7.4% peryear from 1998 to 2007 and the poverty rate decreased from 35% in 2000 to 16% in 2006

The benchmark interest rate in Vietnam was last recorded at 6% From 2000 to 2019, the interestrate in Vietnam was 7.21% on average, reaching an all-time high of 15% in June 2008 and a recordlow of 4.80% in August 2000 The annual inflation rate in Vietnam rised to 5.23 percent in December

2019 from 3.52 percent in the previous month This is the highest inflation rate since January 2014,when inflation accelerated for housing and construction materials (5.12% compared to 3.73% inNovember); food and catering service (9.17% compared to 5.61%); education (4.25 percent vs 4.23percent), while transportation costs rebounded (3.52 percent vs -2.13 percent) Meanwhile, inflationdecreased for textiles, footwear and hats (1.49% compared to 1.59%) The annual core inflation,excluding volatile commodities, increased to 2.78% in December from 2.18% in November, thehighest level since the chain started in April 2015 On a monthly basis, consumer prices increased by1.40%, the highest since September 2012 Inflation Rate in Vietnam averaged 6.22% from 1996 to

2019, reaching an all-time high was 28.24% in August 2008 and a record low of -2.60% in July 2000

II STOCK MARKET ANALYSIS

Despite some fluctuations, Vietnam’s domestic economy is in good shape and provides afloor for the stock market in 2019 This economic expansion is driven by strong growth inproduction and stable expansion in consumption, and is underpinned by an increase in FDI,urbanization, and infrastructure costs The role of FDI industries in promoting manufacturingindustry growth is likely to increase as the pace of relocation of factories from China toVietnam is increasing across a range of industries However, the growing importance ofemerging domestic corporations such as Vingroup that are expanding their footprint into theindustrial sector

Vietnam has increased by 73 points or 8.22% since the beginning of 2019, according to CFD,following this benchmark from Vietnam Historically, the Ho Chi Minh Stock Index ofVietnam reached an all-time high of 1211.34 in April 2018 The Ho Chi Minh Stock Exchange

in Vietnam is expected to trade at 961.43 points By the end of this quarter, follow the globalmacroeconomic model of Trade Economics and analysts expect Looking ahead, we estimate

it will trade at 933.96 over a 12-month period

III INDUSTRY ANALYSIS

Currently, 37 different industries listed on Ho Chi Minh Stock Exchange (of 11 sectors) Based on ouranalysis and forecast of the macro economy and the industry itself, the most potential ones (in 5 to

10 years) are: Insurance, Diversified Finance, Banks, Materials, Consumer Durables & Appear Energy,Software and Computer Services,,…

INDUSTRY POTENTIALS

market in 2017, with a total writtenpremium of $ 2.9 billion, equivalent to61.6% of the overall market value Agrowing middle class with an improvedawareness of insurance products has led todemand in the market in recent years Theincrease in disposable income of thepopulation, in line with the strong growth

of the domestic economy, has boosted the

demand for insurance products

Diversified Finance

balance sheets and the quality of theirsupport assets and we expect theproblematic lending rate across the system

to fall to 4.8% by the end of 2020 from the5.1% at the end of 2018 Profitability will beimproved as banks increase lending to moreproductive retail segments and small andmedium enterprises, while credit costs will

be stable as banks continue to deduct.make provision for assets with inheritanceproblems

investors to spend up to $ 150 billion overthe next decade to meet rising energydemand, with coal going to dominatedespite signs of efforts Government forces

to green With a population of about 100million and an annual GDP growth of about7%, Vietnam forecasts that electricityoutput will need to increase fromapproximately 47,000 megawatts (MW) to60,000 MW in 2020 and 129,500 MW in

2030

Consumer Durables & Appare Energy Vietnam's consumer market is constantly

evolving, driven by changes in lifestyle,income and behavior of consumers Thecountry has experienced a steady growth indisposable income in recent years, whichcan see a rapid growth of total consumerspending from US $ 80 billion to US $ 171billion since 2010 to 2018 This shows thatVietnamese consumers have more money

to spend In fact, in the first nine months of

2018, the country experienced 11.3% ofadditional spending This growth inconsumer activity has certainly created

opportunities for businesses to provide newproducts and services available toconsumers.

Software and Computer Services Vietnam's information technology industry

is experiencing high growth, driven by lowcosts and high quality labor Vietnam hasnow become the eighth largest IT serviceprovider globally The IT industry issupported by the government with tax andlabor incentives, further promoting itsgrowth

METHODOLOGY

I STOCK PICKING

Based on industry analysis above and combined with top-down process, we decided tochoose 30 stocks with potential growth in the future with high expected return Choosing 30companies allow us to significantly reduce the systematic risk and well diversified ourportfolio With deep and clear analysis about Vietnam economy, stock-market, industry andcompany, we find out the safe and potential companies to invest in.

We listed out stocks of the best performance companies basing on valuation historical dataincluding ROA, ROE, and net income

 ROA and ROE are high compared among other companies in same industry

 Net income has increased in 3 latest consecutive years, earnings growth and stability

Standard Deviation

The estimation of a stock’s mean return and market mean return is not only based on itshistorical return but also our forecast and subjective judgment By using Solver analysis, wecame up with the followings stock in our portfolio with minimum variance:

II PERFORMANCE EVALUATION

PNJ 5.236% 10,471 DPM 10.037% 20,074 HPG 7.634% 15,267 VHM 4.796% 9,591 EIB 5.896% 11,793 MBB 0.234% 468 STB 1.346% 2,691 SAB 3.632% 7,264 REE 1.888% 3,776 VJC 9.663% 19,325 TCB 3.322% 6,644 VIC 4.542% 9,085 MWG 8.179% 16,357 NVL 10.120% 20,239 HDB 12.065% 24,131 VRE 5.768% 11,536 FPT 2.906% 5,813 BBC 0.693% 1,386 KDC 2.044% 4,088 Total 100.000% 200,000

The portfolio performance will be evaluated in order to answer these following questions:

 Does portfolio’s return outperform market return with the same given of risk?

 Is the portfolio completely diversified from all unsystematic risks relative to theportfolio benchmark (VN-Index)?

 Can manager’s skills bring higher portfolio’s return?

In order to answer above questions, we will apply some technical measurements (Treynorratio, Sharpe ratio and Jensen’s measure) to evaluate the performance of the firms

In general, the portfolio we conduct has a lower average return than the VN-Indexbenchmark From calculation, we can easily observe that our portfolio risk is less than themarket More specifically, the portfolio average return is -0.058% compared with -0.032% inmarket average return; the portfolio standard deviation is 0.624% while it is 0.537% for themarket

1 TREYNOR RATIO

Treynor ratio is a risk-adjusted measurement of return based on systematic risk It indicateshow much return an investment, such as a portfolio of stocks, a mutual fund, or exchange-traded fund, earned for the amount of risk the investment assumed

The higher Treynor ratio is, the better portfolio performs A high Treynor ratio shows that theinvestors can receive high return for each unit of market risk they have to face with

Treynor ratio is calculated as follow:

The treynor ratio of our portfolio is 0.167% which is more than the market’s ratio which is 0.145%.This implies a higher return our portfolio can bring out compared to the market

2 SHARPE RATIO

Sharpe ratio measures the performance of an investment compared to a risk-free asset, afteradjusting for its risk It is defined as the difference between the returns of the investmentand the risk-free return, divided by the standard deviation of the investment

Like the Treynor measure discussed above, the greater a portfolio's Sharpe ratio, the betterits risk-adjusted performance is

Sharpe ratio is calculated as follow:

Our portfolio has a ratio of 27.85% while that number of VN-index is 31.98%

Treynor ratio =

Sharpe ratio =

Just like the Treynor ratio discussed above, Sharpe ratio is lower reveals more loss thanmarket over one unit of total risk.

According to the methodology, there are totally four steps to build a portfolio, whichcomprises market timing, asset allocation, sector selection, and security selection However,our group just had the ability to carry out only the last two steps in this study withoutconsidering the time entering into the market as well as the asset allocation which arealways considered to have big influence on the results of any investment activities.Therefore, if we have more choice in the time and asset allocation decisions, we hope toconstruct an investment bringing out a better return

Appendix 1: Investment Policy Statement

The Investment Policy Statement with the promised required rate of return and moderate level ofrisk will be reflected consistently in the construction of this portfolio We will use the InvestmentPolicy Statement as a guideline during the investment period and frequently review it to adjust theportfolio characteristics and investors’ references

Appendix 1.1: Investment Objectives

This strategies focus on long term total return strategy Total return accounts for two categories ofreturn: income and capital appreciation Income includes interest paid by fixed-income investments,distributions or dividends Capital appreciation represents the change in the market price of an asset.This type of fund is suitable to investors who still want to make a profit, but accept the averagereturns various asset classes produce With the long term investment, they have the rights to hopethat Vietnam economy will have positive signal especially the following industry that we will concernabout

Appendix 1.2 Target return for portfolio

As the nature of risk–return tradeoff and the downward trend of the market, the investors require anappropriate return to compensate to their risk taken As we follow the total return strategy, wedemand for moderate rate of return instead of aggressive return

The target return for portfolio is 7%

Appendix 1.3 Level of risk

The risk is defined as both unsystematic risk and systematic risk and is measured by standarddeviation and beta variables The risk level of the portfolio,however, is standardized as the beta