BANKING ACADEMY OF VIETNAM

ADVANCED PROGRAM

ASSIGNMENT

PORTFOLIO CONSTRUCTING

Subject FINANCIAL INVESTMENT 242FIN84H09

Lecture Trần Thị Thu Hương

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Students Đặng Trường Huy 25A4012419

Nguyễn Đức Thành 25A4013069

 Class K25CLC-TCC Group 6

Table of Contents
1. Investment Objectives........................................................................................................2

2. Asset Selection Criteria......................................................................................................5

a. Sector Analysis...............................................................................................................5

b. Selecting the stocks........................................................................................................6

3. Portfolio Constructing.......................................................................................................7

a. Gathering data...............................................................................................................7

b. Calculating fundamental parameter............................................................................7

c. Opt for an optimal return rate.....................................................................................9

4. Conclusion...........................................................................................................................9

Reference..................................................................................................................................10

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 1. Investment Objectives
In the realm of personal finance, constructing an investment portfolio is more than a
numbers game—it is a reflection of one’s beliefs, goals, and tolerance for uncertainty. At the
heart of this process lies a pivotal trade-off: the desire to maximize returns and the need to
control risk. Investors typically fall along a spectrum—on one end are those who aggressively
chase profits, accepting volatility as part of the journey; on the other, those who prioritize
safety, even if it means settling for modest gains.

For a young investor with limited capital—roughly 30 million VND allocated annually
to the stock market—this trade-off becomes especially pronounced. Every decision must be
deliberate. Before venturing into equities, it makes sense to establish a baseline: what return
can be achieved without taking on market risk? In Vietnam, the one-year term deposit interest
rates offered by major banks provide that benchmark. As of May 2025, the average return
from these savings products’ hovers just below 6%, with the highest being 6.05% offered by
Viet Capital Bank. This rate becomes the minimum threshold—the return that any risk-bearing
investment must at least exceed to be justified.

Bank Interest rate from Deposit

Viet Capital Bank 6.05%
Sai Gon Bank 5.8%
Dong A Bank 5.8%
Bac A Bank 5.8%
CB Bank 5.75%
Viet Bank 5.7%
Ocean Bank 5.7%

Table 1: 12-month deposit interest rate (updated 5/2025)

This benchmark also prompts a deeper question: is it better to aim for quick, high-yield
returns despite the risks, or to pursue slow but steady growth? Warren Buffett famously said,

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“Nobody wants to get rich slow,” a quote that resonates in an era of fast money and
speculative booms. The allure of extraordinary profits is undeniable, particularly in markets
like cryptocurrency, where assets can double or triple in value overnight. However, such gains
often come with risks of equal magnitude—ranging from exchange failures and project scams
to wild price swings and security breaches. For every success story, there are countless
accounts of devastating losses.

Figure 1: A famous quote from outstanding trader Warren Buffet

While speed can be thrilling, sustainability matters more. Compounding, often

described by Albert Einstein as the “eighth wonder of the world,” demonstrates how
consistent, moderate returns can generate significant wealth over time. The secret lies not in
timing the market, but in time in the market. With this long-term view, we believe the smarter
route is not the pursuit of windfalls but the cultivation of durable, low-risk growth.

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 Figure 2: Quote from Einstein

While speed can be thrilling, sustainability matters more. Still, it would be

disingenuous to ignore the undeniable appeal of high-risk, high-reward markets. Nowhere is
this more apparent than in the world of cryptocurrency—a financial frontier that, for better or
worse, has redefined what investors believe is possible. Within just a few months of a bull
market, it’s not uncommon to witness assets doubling, tripling, or even soaring by over
1000%. Such meteoric returns, unimaginable in traditional markets, have drawn millions into
the crypto space, allured by the dream of instant wealth.

Figure 3: Cryptocurrency growth through years

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 But as with every outsized opportunity, the risks are equally extreme. The crypto
market is rife with instability: exchanges collapse overnight, projects vanish without a trace,
and price swings of 20–30% within hours are not outliers—they’re routine. Beyond price
volatility, there are deeper systemic dangers. The lack of regulation, security vulnerabilities,
dependence on cold wallets, and threat of hacking make the entire ecosystem fragile. In this
chaotic landscape, transparency is rare and trust is easily broken.

Having anchored our strategy in this philosophy, our goal became clear: to build a
portfolio that achieves an annual return at least above the 6% offered by banks—while
minimizing volatility as much as possible. To do this, we turned to the principles of modern
portfolio theory, specifically the efficient frontier, which maps out the set of optimal portfolios
offering the highest return for a given level of risk.

2. Asset Selection Criteria

a. Sector Analysis
But building a sound portfolio doesn’t begin with picking stocks—it begins with
choosing the right sectors. No matter how strong an individual stock may appear, if it belongs
to a declining industry, it’s unlikely to perform well over the long term. To ensure resilience
against economic cycles, our selection focused on three pillars of the Vietnamese economy:
energy, banking, and real estate.

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 Figure 4: Demonstration for Energy, Banking and Real Estate

The energy sector stands out for its essential role in daily life and industry. Regardless
of whether the economy is booming or contracting, demand for electricity, fuel, and power
remains steady. This inelastic demand provides a cushion during downturns. Moreover, energy
companies—particularly those in oil and gas—often benefit from rising commodity prices,
making them useful hedges during periods of inflation. As Vietnam and other countries
continue their green transition, the rise of renewable energy further enhances the sector’s long-
term potential, positioning it at the crossroads of sustainability and profitability.

In parallel, the banking sector offers its own set of advantages. As the core
infrastructure of any economy, banks are among the first to benefit from a rebound in growth.
When interest rates drop and credit expands, banks experience a surge in loan activity,
boosting their earnings. Their wide margins between lending and deposit rates—known as Net
Interest Margins—are a reliable source of income. On the trading floor, bank stocks also tend
to exhibit high liquidity, allowing for easier entry and exit compared to other sectors.

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 The third leg of our strategy rests on real estate, a sector uniquely intertwined with
Vietnam’s rapid urbanization and shifting demographics. As more people migrate to cities and
industrial zones expand, demand for residential and commercial property continues to grow.
The government’s ongoing legal reforms, including revisions to the Land Law and policies
aimed at loosening credit access, suggest a favorable regulatory environment in the years
ahead. Within the sector itself, opportunities vary—from high-end housing to affordable
developments and industrial real estate—offering a blend of growth potential and
diversification.

These sector choices are not only grounded in theory but also supported by
macroeconomic signals. The energy sector is bolstered by rising electricity prices and resilient
oil markets. The banking industry benefits from projected credit growth of 14–15% and the
resolution of bad debt. Real estate, meanwhile, is poised for a rebound fueled by low interest
rates and the anticipated impact of legislative reforms.

b. Selecting the stocks

Once sectors were identified, we carefully selected six stocks that represented strong,
reputable players with solid fundamentals. From the energy sector, we chose PLX (Petrolimex)
and PVO (PetroVietnam Oil). In banking, VCB (Vietcombank) and TCB (Techcombank) stood
out as leaders. For real estate exposure, we picked VHM (Vinhomes) and DXG (Dat Xanh
Group), ensuring a mix of both premium and mid-range property developers. These stocks
were not chosen in isolation, but in harmony—each contributing to a portfolio that balances
income, growth, and defensive strength.

3. Portfolio Constructing
a. Gathering data
The next challenge was to determine the optimal allocation of capital among these
stocks. For that, we collected monthly return data from January 2019 through December 2024.
Monthly data, as opposed to daily, provides a more stable view of trends by filtering out short-
term noise caused by transient news, sudden market reactions, or liquidity gaps. This approach
fits neatly with our long-term investment outlook.

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 b. Calculating fundamental parameter
Using this data, we calculated key statistics for each stock: mean return, variance,
standard deviation, and covariance. Of particular importance were the correlations between
each asset. Ideally, assets should not move in tandem. When one stock dips, another should
rise or at least hold steady. This inverse or low correlation helps spread risk—a foundational
principle in portfolio management.

0.01887 0.01898
Mean 0.002781667 0.028188333 0.005058333 2 -0.00218 5
0.01283 0.01027 0.02926
Variance 0.008939085 0.038426337 0.008224654 8 7 8
0.11330 0.10137 0.17107
Std.dev 0.094546735 0.196026368 0.090689879 6 7 8

Table 2: Mean, Variance and Dev from 6 each of 6 chosen stocks

CORRELATION MATRIX

PLX PVO VCB TCB VHM DXG

PLX 1

PVO -0.306649261 1

VCB -0.03071468 0.145440512 1

TCB -0.07008476 0.303335585 0.465969554 1

VH
M -0.004135355 0.242250577 0.541395834 0.582652361 1

DXG -0.126529524 0.351939995 0.31052784 0.630752178 0.537267098 1

Table 3: Correlation Matrix from each of 6 chosen stocks

With these figures in hand, we turned to Excel’s Solver function to perform a portfolio
optimization analysis. Our objective was clear: identify the weightings that would yield the
highest possible return for the lowest acceptable risk. The results generated an efficient
frontier—a curve showing all optimal portfolios under different risk-return scenarios.

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 Figure 5: Minimum-Variance Frontier: 6 chosen stocks

c. Opt for an optimal return rate

On this frontier, we found a sweet spot: a portfolio with a monthly return of 0.75%,
equivalent to 9% annually, and a standard deviation (a proxy for risk) of just 5.74%.
Compared to the volatility typically associated with equity markets, this level of risk is notably
conservative. It reflects our goal of minimizing exposure while still outperforming risk-free
investments like fixed deposits.

4. Conclusion
In summary, this portfolio isn’t about chasing fast money or predicting the next market
trend. It’s a carefully constructed system rooted in data, theory, and an understanding of
economic cycles. It reflects a belief in long-term, compound growth rather than speculative
windfalls. By thus electing resilient sectors, balancing growth and stability, and optimizing
risk through diversification, we’ve created a blueprint for sustainable wealth accumulation.

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 What’s more, this strategy is adaptable. As new data emerges and market conditions
evolve, allocations can be recalibrated without compromising the core philosophy. Ultimately,
the power of this portfolio lies in its balance: it doesn’t bet on any one idea—it bets on
discipline, structure, and the enduring strength of a well-diversified approach.

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Reference
James Chen. (2022). Investment Objective: Definition and Use for Portfolio Building
https://www.investopedia.com/terms/i/investmentobjective.asp

Techcombank. (2025). Cập nhật lãi suất tiết kiệm mới nhất của 30+ ngân hàng
https://techcombank.com/thong-tin/blog/lai-suat-tiet-kiem

Management Consulted. (2024). Tổng quan về ngành năng lượng: Xu hướng, đổi mới và
thách thức
https://managementconsulted.com/energy-sector-overview/

Statists. (2024). Banking industry in Vietnam - statistics & facts

https://www.statista.com/topics/10042/banking-industry-in-vietnam/#topicOverview

Debbie Carlson. (2024). Real estate sector: Investing in stocks to keep you grounded
https://www.britannica.com/money/real-estate-stocks

Investing.com. (2025)
https://vn.investing.com/

US Wealth Management. (2023). What is a diversified portfolio?

https://www.usbank.com/investing/financial-perspectives/investing-insights/what-is-a-
diversified-portfolio.html#:~:text=Diversifying%20your%20portfolio%20is%20a,better
%20prepared%20for%20the%20future.
CFI Team. Efficient Frontier
https://corporatefinanceinstitute.com/resources/career-map/sell-side/capital-markets/efficient-
frontier/

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