The student investment fund practices ‘bottom-up’ investing, using fundamental analysis of financial and economic information to identify mispriced securities. Students evaluate fundamental information including financial reports, industry comparisons, new regulations, demographic trends, earnings statements, and economy-wide trends to build discounted cash flow models and relative valuations to identify potentially mispriced securities.
The distribution of fund assets across portfolio groups, or ‘asset allocation’, can differ from the blended benchmark weighting as determined by the Asset Allocation Committee. The maximum allocation to any portfolio group may not deviate by a larger amount than the lesser of: 7.5 percentage points or 50% of the aggregate benchmark weighting of the portfolio group benchmark.
All funds allocated to a portfolio group will be immediately invested in ETFs designed to track the performance of the portfolio group benchmark. As securities are selected to be included in the portfolio, holdings in the benchmark ETF are reduced to generate the funds to execute the order. If a security is selected to be removed from the portfolio group holdings, the funds from its sale will be immediately reinvested in the benchmark ETF.