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Contact us: cfp@rhsmith.umd.edu The Center for Financial Policy Annual Portfolio Management Competition Overview In an effort to promote financial literacy and prepare students interested in entering the investment world, the Center for Financial Policy is hosting its inaugural portfolio management competition in the Fall of 2014. Students will be given a hypothetical $10,000,000 to manage over a two-­‐ month period. The competition is open to both full and part-­‐time MBAs and M.Fins, as well as undergraduate Finance Fellows. The goal is to prepare students to for careers in the investment world and enhance their personal finance knowledge. It gives students experience in the challenges portfolio managers face with respect to choosing investments and how worldwide news affects their investment choices. Awards Six finalists will be chosen based on the quality of their strategy and overall return of their portfolio. The teams will be evaluated based on the quality of their initial strategy (30%), their overall return (30%) and their ex-­‐post analysis (40%). The six finalists will give a 10-­‐minute present to the judges on December 4th where the judges will choose the three winning teams. 1st Place: $500 2nd Place: $300 3rd Place: $200 Schedule • Registration is on a first come, first serve basis. Eight teams comprised of 3-­‐6 students will be accepted. • Registration opens August 25th and are due by August 29th (visit the CFP website Initiatives & Programs). • The performance evaluation period will run from: September 15, 2014 to November 28, 2014. • A one-­‐page interim review of each team’s trading strategy is due October 20, 2014. • The final two to three page report is due November 30, 2014. • The awards and presentation ceremony will be held at VMH on December 4th. Finalists should have at least 1-­‐2 members present. All participants are invited to this event. Judges Professor Russ Wermers, Professor of Finance and Director of the CFP Professor Pete Kyle, Charles E. Smith Chair Professor of Finance Professor Mark Lowenstein, Associate Professor of Finance Assistant Director Kristen Fanarakis, Assistant Director of the CFP Associate Director Nicola Daniel, Associate Director Department of Finance
Competition Parameters Ø Students given a hypothetical portfolio worth US$10,000,000 to manage as they see fit within the competition parameters. Ø Teams should be comprised of three to six students. Ø Only US publically traded securities can be traded (stocks, index funds, ETFs, mutual funds). Ø Individual bonds, futures, options, ETNs or derivatives of any kind are not permitted. However, fixed income ETFs are permitted (e.g., JNK or HYG are permissible). Ø Short sales and leverage are not permitted. Ø Short and leveraged ETF’s are not permitted. Ø Individual management fees or transaction costs will not be included. Instead, each trade will be assessed a 50bp fee. Ø Teams do not need to calculate the total risk or tracking error of their portfolio Ø There are no restrictions on portfolio weightings, i.e., the entire portfolio can consist of a single stock or ETF, but teams may lose points on their analysis for failing to diversify. Ø For simplicity in the return calculations we only measure price changes when securities are bought or sold. Transaction fees, i.e., the bid-­‐ask spread will not be accounted for in the calculation. Ø At the end of the performance period teams must submit a two to three page report outlining their initial investment thesis, any changes they made to their portfolios and evaluate why their investments did or did not perform. Ø Students will use a template (provided by the CFP) to create and track their portfolios on Yahoo Finance. Given time restrictions student will have a 1-­‐day price “look back” period to evaluate where they would want to make a trade. Each team will submit their initial portfolios and any changes to their portfolio on a weekly basis to the CFP administrator email. Execution prices will be verified on a random basis. The Honor Code will be strictly enforced. Background and Preparation Ø There are no pre-­‐requisites to participate in the competition other than an interest in investments and financial markets. Ø Registrants will receive an information packet with portfolio management best practices, guidelines and recommended reading. Ø Students can post questions to the CFP Portfolio Management Competition Google Hangout wall throughout the competition period. Ø The CFP will also host periodic webinars on various investment topics and post tips to the Google Hangout. Questions? Send them to: cfp@rhsmith.umd.edu Visit the CFP website under Initiatives & Programs to apply