Graduate Student Managed Fund Mission Statement
The Fund provides an opportunity for UMass Boston graduate students to gain experience managing an investment pool, including security selection, portfolio management, and fund operations.
The Fund will act as a philanthropic vehicle, providing scholarships to graduate students at UMass Boston on a needs basis. In order to reliably fund scholarships annually, the Fund will strive for absolute returns as measured against the S&P500 benchmark. All gains above the Fund's $100,000 principal will be used for student aid.
The Fund may incorporate a managed-beta strategy which shifts to low beta stocks when the market is expected to decline and moves to high beta stocks when an increase in the market is anticipated. The Fund benefits from low trading costs which facilitates the funds rebalancing transactions necessary in pursuit of a managed-beta strategy. Given the Fund’s tax status, there is no preference for the manner in which returns are earned, such as dividends, capital gains, and interest income. While the Fund primarily targets U.S. stocks and sector ETFs, the Fund is not restricted from purchasing ADRs, or non-equity ETFs for the purpose of diversification and reduced risk. This could include the purchase of fixed income, currency, commodity, and other investment vehicles.
The GSMF will be composed of both ETFs and individual stocks. A minimum of 50% of the portfolio will be comprised of ETFs with the remaining 50% being allocated to individual securities. No single stock position will exceed 5% of available funds earmarked for stock selection.
The Fund will not use leverage in any way to achieve the objectives. Non-equity investments, including cash, will be limited to 10% of the Fund’s assets whenever this can reasonably be achieved. All trades will be executed on Thursday following the Monday evening GSMF meeting. Given that trades are executed only once a week, highly speculative, volatile, or illiquid securities will likely not do well in the Fund since it is difficult to quickly exit a position.
Buy, Sell, Hold Guidelines
Each security will be evaluated from a fundamental and technical perspective. Furthermore, Investment teams will incorporate event driven analysis for each proposal. All trade buy orders will include a buy limit price above which the security will not be purchased.
Sell decisions will be driven by the following. Each security proposal will provide a target appreciation price at which point the security can be sold or re-evaluated as a hold recommendation based on an updated target price. The security will also be sold when the selection underperforms the respective sector ETF benchmark for two consecutive weeks, or falls to the stop loss price, should the Investment teams choose to use that option.