1. Investment objective The rapid increase in money demand shows that borrowing is large, the expansion of production activities also sends a positive signal in the context of the economys efforts to recover from the pandemic. Longterm growth and capital preservation are the first priorities in our objective lists. We have to get a vision to grow up, not only earning money. Every investor has a different risk tolerance for their investment options. A risk map is an overview of an individuals risk tolerance. A risk schema can also refer to potential threats to an organization. Therefore, our risk profile is conservative. The duration for investing will be more than 5 years. Actually, when we take a short time, it may help to decide easier, in my opinion, but it can not earn much benefits as longterm stocks. As a result, the shortterm liquidity is not allowed, we have no needs for cash. The discount rate is 6% (estimated by historical rates of returns).
Trang 1EQUITY FUND
Market Review
The impressive growth of the US stock market has begun to break since the beginning of 2022 and ended on February 13 The S&P 500 Index officially became to be a bear market, which was reported a 20% drop from its peak On March 26, the market rallied strongly, the signal of the better outlook of retail businesses and the tightening of monetary policy issued by the Fed is no longer a serious concern Led by shares of Apple, Tesla, and Amazon, Nasdaq was the biggest gainer in the session CFRA Research strategist Sam Stovall said that with Q1 results, investors have reasons to be optimistic Macy's shares rose 19.3%, shares of two low-cost retailers Dollar General Corp and Dollar Tree rose 13.7% and 21.9% respectively because amid economic inflation, cheap goods were received will be most popular
Investment objective and policy
The expectation of a higher return in the future, as a reward for the sacrifice in terms of time and cash, which are tied up in the investment and the risk-taking
The expected income of the company is not only the annual dividends but also the shareholder of the company, having the right to participate, speak, vote or stand for self-nomination at the annual General
Meeting of Shareholders of growing up companies.
To build a portfolio with a minimum variance optimization, criteria have taken into accounts as per follow:
US companies listed from: NYSE
Market Cap: 19.223 US billion in 2015
Involving industries: Materials, Energy, Technology, Health Care, Utilities
No short-selling
The most common sense about ‘the way to profit maximization today’ is US stocks because of the market's characteristics, which is a high capitalization market With high capitalization market, it allows
a huge number of transactions Another thing is that Dow Jones Index invented by Charles Henry Dow and Edward David Jones in 1884 presented the changes of 30 biggest companies in US market is
considered to be oldest and most exact Therefore, when putting money into these 30 companies, we can reduce risks and be foreseeable the trend
Risk profile
Risk profile covers two types:
Systematic risk, also known as market risk, includes risks that affect the entire stock market, in other words, any investors who participate in Unexpected political events, world economic recession, interest rate fluctuations, exchange rate are representatives for the systemic risk This
is a type of risk that investors cannot control, and cannot avoid, even when diversifying and allocating investments to different stocks Presented in the following forms:
Commodity price risk Model risk
Payment risk Inflation risk and interest rate risk
Trang 2 Unsystematic risks are risks that only happen to one industry or a certain field
Rating Risk
Audit risk
Legal risk
Social media risk
High risk and dominoes are fundamental characteristics of the stock market The risks when investing in securities is something that investors need to learn carefully to prevent before taking part in the stock market
Fund profile
KEY FACT
Dates
Fund Type
100% equity
US companies with big market capitalization
Portfolio composition
Trang 3UPSU MSMorgan Stanley Finance 9.00 MSM Marsh & McLennan Companies, Inc Logistics 1.60
TAT&T IS&P Global Inc Commercial Service 0.73
Sector diversification
31.03%
17.24%
24.14%
10.34%
10.34%
6.90%
SECTOR BREAKDOWN
Technology Retails Finance Commercial Service Social Media Logistics
27/1
0
30/1
0 2/115/118/1111/1114/1117/1120/1123/1126/1129/112/125/128/1211/1214/1217/12
-
200,000.00
400,000.00
600,000.00
800,000.00
1,000,000.00
1,200,000.00
1,400,000.00
-20.00%
-15.00%
-10.00%
-5.00%
0.00%
5.00%
10.00%
15.00%
20.00%
Portfolio performance
Value % change This outstanding performance has been noted in impressive measures of investment efficiency
Trang 4Sharp 2.81
In which: Standard Deviation is a statistical tool by which the dispersion of a data set relative to its mean
is measured, the formula used is the square root of the variance, the excel will provide details According
to Corporate Finance Institutes (2022), Sharpe ratio is under 1 point, it means the investment deal is bad The point from 1-1.99 is acceptable, which you have to think about much For the 3 point, it’s
“delicious”, you have to eat immediately Our result shows that 2.81 is in range of 2-2.99, which means
“great” Therefore, the Sharpe ratio reflected a positive signal
The Treynor ratio is essentially the same as the Sharpe ratio calculating the risk and return of an actual portfolio However, the portfolio's beta, or systematic risk, is used to measure the Treynor ratio to represent the degree of changes The Sharpe ratio is calculated for a more accurate profit assessment The standard deviation of the portfolio is the variable in the formula for calculating the Sharpe ratio The formula as details below:
Treynor = (portfolio return – risk-free return) / portfolio beta
The Jensen index reflects risk-adjusted performance and represents the average return of a portfolio or investment, so that the capital asset pricing model (CAPM) prediction is calculated through the portfolio investment or beta and average market returns may be higher or lower depending on the Jensen index This indicator is alpha
Trang 5In there:
R(m) = real return on relevant market index
B = portfolio beta
Review
There is a strong growth scenario for global equities as equities often outperform bonds when the labor market is improving, as is the case now when economies recover from a recession For now, the financial conditions are still easy, the risk premium is reasonable, the returns continue to grow and that's enough for stocks to outperform bonds However, in the face of a complex set of macroeconomic challenges, Investors are leaning on a cautious approach A Barbell strategy tends to involve weighting on two separate groups of stocks to hedge against uncertainty This includes defensive stocks - offering consistent dividends and returns regardless of market volatility such as good quality stocks and those tied
to transitions ESG and the digital economy, along with cyclical stocks Chinese yuan-denominated and emerging-market bonds over global bonds will be our goals for short-term purpose, both of them aim to
"diversify investment portfolios and superior transfer” Despite the current risks, the future returns on Asian credits look very attractive compared to the US and Europe In alternative investment channels, We will focus on strategies that support cost-effective hedging against inflation related to sectors underpinned
by “real” assets such as real estate and infrastructure globally and in Asia
Trang 6Part 2:
1 Investment objective
The rapid increase in money demand shows that borrowing is large, the expansion of production activities also sends a positive signal in the context of the economy's efforts to recover from the pandemic Long-term growth and capital preservation are the first priorities in our objective lists We have to get a vision
to grow up, not only earning money Every investor has a different risk tolerance for their investment options A risk map is an overview of an individual's risk tolerance A risk schema can also refer to potential threats to an organization Therefore, our risk profile is conservative The duration for investing will be more than 5 years Actually, when we take a short time, it may help to decide easier, in my opinion, but it can not earn much benefits as long-term stocks As a result, the short-term liquidity is not allowed, we have no needs for cash The discount rate is 6% (estimated by historical rates of returns) The standard procedure will be Financial Advisor shall help clients meet long-term financial goals, confer with client to create asset allocation, select assets in accordance with asset allocation providing sufficient diversification of risk and returns, control and report all investment costs, monitor all investment options and portfolio custodian, Value all portfolio holdings on a regular basis, provide monthly reports that include securities, cash flow, income, and the monthly change in value According to data from Vanguard, there is no universally agreed upon asset allocation Neither is there data to recommend rebalancing more frequently than annually Thus, the portfolio will be rebalanced annually, while attempting to minimize the tax consequences of asset sales
Market overview
The outbreak of the Covid-19 pandemic is a dominant factor affecting all socio-economic activities around the world, pushing the global economy into recession and creating a public health crisis
Under the impact of the Covid-19 Pandemic, the Vietnam Stock Market experienced a sharp decline in the first quarter of 2020 before recovering and growing in the last two quarters of 2020 Firmly conquering all difficult developments As predicted by the market, SSI continued to record outstanding
Trang 7business results: revenue and profit before tax increased by 38.5 and 40.8% respectively compared to
2019 - successfully completing the business plan Along with efforts to maintain business continuity before 3 outbreaks of pandemics a year, SSI is proud to provide a safe and fully qualified environment for each officer and employee to work with peace of mind The comprehensive income policy is maintained and guaranteed at the same level as before the epidemic has occurred
With a system of policies promulgated and implemented in a relatively timely manner and continuously updated with new developments of the situation, Vietnam has succeeded in maintaining a positive growth rate in 2020 GDP growth may have recovered quite quickly from the third quarter of 2020 and the growth rate for the whole year of 2020 reached 2.91% over the same period, although much lower than the Government's target, but still belongs to the group of countries with highest growth rate in the world Inflation after a strong increase in the first months of the year (mainly from pork prices) has gradually stabilized, increasing by an average of only 3.23% over the same period last year due to the sharp decline
in basic commodity prices Vietnam has protected its production, processing and manufacturing capacity
in 2020, reflected in high export growth (7%), trade surplus reaching the highest level in history (20 billion USD) and Manufacturing is the main driver of GDP growth Meanwhile, the service sector (except financial services), especially those related to tourism and passenger transport, was heavily affected (the number of international tourists decreased by nearly 80% compared to the previous year) 2019) and it is likely to take many years to recover This can also explain why domestic demand has recovered slowly, increasing by only 2.6% over the same period (if excluding inflation, it even decreased by 1.2%)
Vietnam Stock Market (stock market) ended 2020 successfully beyond expectations The two main indexes, VN-Index and VN30, have recovered spectacularly 67.5% and 75.3% from the bottom and regained positive growth of 14.9% and 21.8% for the whole of 2020 This is also the 5th consecutive year that VN-Index has outperformed the MSCI Frontier Market - MSCI FM (17.3%) In particular, the group
of mid-cap stocks (mid-cap) has increased by 12% compared to the VN30 group after 3 consecutive years
of being less effective than this group Individual investors are the main driving force for the growth of
Trang 8Vietnam's stock market in 2020 The number of new accounts opened increased sharply month by month, reaching 63,075 accounts in December - the highest level in history by the end of 2020 Liquidity reached
a record thanks to strong personal cash flow, matched transaction value on 3 exchanges reached 621 million USD/session in December 2020 (up 53% compared to November and increased 343% over the same period) The average transaction value for the whole year of 2020 reached 267 million USD/session,
up 79.2% compared to 2019 and 17.2% compared to 2018 In the opposite direction, for the whole year of
2020, the transaction rate Foreign investors' transactions were only 11.3% of the total transaction value, much lower than the level of 14 - 16% in previous years, and even dropped to only 7.3% in December Foreign investment net sold is 813 million USD in 2020, while the net inflow into ETF reached 193 million USD in 2020 If foreign capital inflows return in 2021, especially with a higher proportion for Vietnam in the MSCI FM index This will be a strong support factor for the stock market next year, as individual investors often act according to foreign investors
Risk profile
The following figure capture sectorial diversification of the fund Of which, Banks and Real estate accounts for more than half of the portfolio
39.60%
22.70%
10.90%
8.80%
5.30%
4.60% 2.30%
Consumer Dura-bales; 0.01; 1.30%
Utilities; 0.01; 1.10%Financial services; 0.03; 2.50%Energy; 0.01; 0.50%Insurance; 0; 0.30%Cash & Others; 0; 0.10%
Banks Real Estate Food Beverage & Tobacco Materials
Technology Retailing Transportation Consumer Durabales Utilities
Financial services Energy
Insurance Cash & Others
Table 1: Major contributor of the fund
Trang 9Stock Amount Value % NAV
The largest investment of the fund is on HPG-the leading steel manufacturer in Vietnam Dragon Capital devotes a special interest for middle-cap banks with approximately 22% of the fund is allocated to this sector Apparently, the overall strategy of the fund is achieved with additional large investment in Vin group, thereby by forming a real-estate focused investment strategy
Performance
The fund outperforms the benchmark index in major measures Indeed, a lower P/E implies a higher growth potential for the fund By investing in middle to large companies (P/B of the fund is higher than that of the benchmark), the generated Dividend is also significantly higher than VN-index Although the statistical risk is slightly higher than VN-index, it is compensated by higher Sharpe ratio, implying that the fund is well managing the risk
Trang 10The above figures capture the accumulated growth of the fund Compared to the benchmark index, investing in the VEF would generate 75% higher returns
Trang 11In the first quarter of 2020, UCITS’s operating results were also strongly affected by the Covid-19 Pandemic At the end of 2020, UCITS's total assets under management reached VND 6,670 billion, an increase of 45% compared to the end of 2019, due to a decline in the market and investors withdrawing capital in panic and fear about the first wave of the epidemic With the efforts of the entire staff, UCITS's business results had a rapid and spectacular recovery in the last 3 quarters of the year Total assets under management gradually increased with success in setting up new investment funds, increasing the size of existing funds, as well as winning a number of new portfolio trust customers By the end of 2020, UCITS's total assets under management reached VND 6,670 billion, up 45% compared to the end of
2019 Revenue from management fees reached 110% of the plan, but decreased by 26% compared to the previous year due to the recovery of total assets under management came mainly at the end of the year UCITS exceeded 21% of the profit plan set out at the beginning of the year
REFERENCE
1 Citywire Funds Insider (2020) Vietnam Equity (UCITS) Fund Available at:
https://citywire.com/funds-insider/fund/vietnam-equity-ucits-a-usd/c482765?periodMonths=12(Accessed:
13 July 2022)
2 Corporate Finance Institute (2022) Sharpe Ratio Calculator Available at:
https://corporatefinanceinstitute.com/resources/templates/excel-modeling/sharpe-ratio-calculator/
(Accessed: 13 July 2022)
3 Dragon Capital (2022) Vietnam Equity (UCITS) Fund Available at:
https://www.dragoncapital.com/vef/ (Accessed: 13 July 2022)