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FINC 490 Student Managed Fund Course Guide

Catalog Course Description

FINC 490 Student Managed Fund provides students an understanding of various portfolio objectives and policies, as well as an appreciation of different investment strategies and styles. Building on the concepts learned in FINC 315, students will apply their understanding of key investment tools – quantitative research methods, economic relationships, financial statement analysis, common approaches to valuing assets, the measurements of portfolio risk and return, and the key elements of the portfolio management process. During this course students will analyze and manage the “Siena Fund,” an equity investment portfolio, evaluate its performance, and prepare and present reports of the results at the end of the semester. The course may also include a professional lecture series, where investment practitioners discuss their own investment philosophies, strategies, and experiences. Prerequisites: FINC315 and Instructor approval. (3 credits)
 

Course Objectives

This is a one-semester course whereby selected students enrolled in the Finance Program are engaged in the management of a portfolio of equities securities. The objective of the courses is to blend traditional academic learning with the practical experience of hands-on investment management culminating with a formal annual report describing the entire investment management process at the end of the school year. The courses is designed to provide students with a thorough grounding in the process of portfolio management, from individual security evaluation to broad asset allocation decision making. Topics covered in the courses include economic, industry, and individual firm fundamental analysis; trading strategies based on inefficiencies (i.e. firm size, book value, momentum, quality of earnings, insider trading, and earnings surprises); the portfolio management process including asset allocation, benchmarking, evaluation, and reporting; and the manner in which trading takes place and the types of trades. The course focuses on equity investing and requires the students to understand the composition of the existing portfolio, as well as the fund bylaws, policies and procedures, before recommending any changes. The course further concentrates on the writing of a bi-annual report. Throughout the course, emphasis will be placed on linking the theoretical and practical aspects of the investment management process. It is expected that the students will produce research analyses and a final report that will compare favorably with those generated by professional investment analysts and portfolio managers.

The students are responsible for the investment decisions involving the composition of the “Siena Fund.” At the beginning of the semester the students will acknowledge the Siena Fund bylaws, as well as the working policies and procedures that govern the management of the portfolio. Students will establish the stock selection criteria, research the prospective firms in their assigned sectors, generate reports, deliver presentations, make recommendations to invest or liquidate positions, and execute trades. With regard to the Siena Fund, the professor for the course serves in an advisory capacity and will answer questions and make periodic presentations on relevant aspects of investments. The Professor is responsible for overseeing the students in the program, delivering the course content, and grading the students’ work. While the students assume responsibility for all portfolio decisions, they do report periodically to an Investment Advisory Board regarding their investment decisions and the performance of the Fund during each semester. Members of the Investment Advisory Board, which consist of Finance faculty and investment professionals, will be selected based on their availability and ability to enhance the educational benefits of the student-managed portfolio experience. Meetings with the Investment Advisory Board will take place several times during each semester. The goal of the meetings is to facilitate student activity and provide guidance. The Investment Advisory Board will also review student investment analyses and provide input regarding investment-related issues during the semester. The final responsibility of the students will be to create a formal annual report and present it to the Investment Advisory Board and at the R.I.S.E. symposium portfolio management competition (each Spring). The students will also handle all issues related to the transition of the portfolio to the next class, including the provision of the bylaws, working policies, procedures, and all related documentation.

Required Text

Investment Analysis and Portfolio Management, 7th edition, Frank Reilly and Keith Brown, Thomson/Southwestern Publishing.
 

Grading Policy

1. ACADEMIC DISHONESTY – Siena College

It is not feasible to attempt to develop a list of all conceivable examples of academic dishonesty, but it may be helpful to list a few and to note that they all involve an attempt to deceive, to distort perceptions of reality, to gain a record of academic accomplishment greater than earned. All who are parties to the deceit are involved in academic dishonesty. Most acts of academic dishonesty involve cheating on examinations or reports in one way or another, improperly obtaining examination questions, plagiarism, forgery, falsification of records or impersonation of a candidate taking an examination. Students who engage in academic dishonesty, whenever that may be, shall be subject to appropriate university penalties. Penalties ranging up to an F in the course in which the dishonesty occurs can be imposed by the dean of the school in which the course is offered. Additional penalties, if they are warranted, ranging up to expulsion from the university, can be imposed by the dean of the college or school in which the affected student is enrolled. If an appeal against the imposition of a penalty for academic dishonesty is taken beyond the college or school in which it was imposed, it should be directed to the Office of Academic affairs.

2. ETHICAL CONSIDERATIONS

You should not represent material from secondary sources as your own in any reports or papers, i.e., plagiarize material from secondary sources. Anyone engaging in plagiarizing will automatically receive an "F" in the course and the case will be referred to the department Chairperson for further action. Students are expected to conduct themselves with the highest level of professional and ethical standards. Guest speakers and members of the Investment Advisory Board will be invited to discuss their perspectives on various aspects of portfolio management. Because the guests are prominent members of the investment community and donating their time, students should be attentive, professional, prepared, and polite. It is important to remember that students are representing Siena College, the School of Business Administration, and the finance department.

3. GRADING

Students will receive a grade on the following items:

  • Industry/sector analyses reports and updates
  • Stock analyses reports and updates
  • Class participation
  • Attendance/group participation
  • Final reports


4. COURSE LEARNING OBJECTIVES LINKED TO ASSESSMENT GOALS

Goal 1: Possess effective written and oral communication skills
Objectives: As a part of the required course work, students will be making class presentations, individually and as part of a group. They will also be writing persuasive reports and be required to communicate knowledgeably with professionals in the investment industry
Goal 2: Be knowledgeable of the investment environment
Objectives: You will need to articulate important characteristics of the investment environment.
Goal 3: Possess the ability to work as a team member and leader
Objectives: Students will be required to effectively manage a team project, group dynamics, and perform multiple roles in a team context
Goal 4: Possess critical thinking skills
Objectives: Students will be required to collect appropriate information and derive relevant conclusions, to write a clear and succinct reports of their recommendations, and employ critical thinking process in one’s self and others.

Industry/Sector Analyses

Students will be assigned to sector groups. Early in the semester a high quality industry/sector report will be due, which will be shared with the Investment Advisory Board. This report will also be orally presented to the class – with periodic updates provided throughout the semester. The reports will include a review of important events in a sector, the outlook for the sector, and firms in the sector that look attractive. Each sector group will be responsible for following events that relate to the sector and be required to make brief periodic reports to the class during the semester.
Since sectors can vary greatly in their characteristics, focusing on stocks in a particular sector rather than the market as a whole is generally a better way of putting the analysis into the proper context. Each group will recommend securities from their sector for inclusion in the Siena Fund with the amount determined by the policies created by the Siena fund student members.

Stock Analyses

Students will conduct research on an ongoing basis for the firms in their respective sector with the goal of 1) identifying potential investments, 2) re-evaluating current holdings, and 3) determining the best asset allocation strategy. Each group will conduct detailed security research (fundamental security analysis), which will be submitted for grading. The primary industry/sector analyst will present the report and recommendation to the other members of the class. Presentations will include an oral and concise written report for the other class members.
Other members of the group will be expected to help answer any questions that arise following the presentations. The presentations will include analysis of new securities for consideration and an evaluation of securities currently held in the portfolio. Presentations will graded by the quality of the research and the effectiveness with which the information is delivered. Students are responsible for maintaining thorough documentation of all analyses and recommendations.
The group preparing the presentation will request a class vote on the proposed action. The Chief Investment Officer of the day will chair the portfolio meeting, oversee the vote, and document the proposed action. If affirmed by the class, and with the approval of the professor, the group will draft a formal recommendation to the Investment Advisory Board, which will include a summary of the research and minutes of the class discussion and vote. Following the Investment Advisory Board meeting, the transaction will be executed according to the internal policies and procedures of the Siena Fund.

Class Activities

During the semester each student will be assigned to serve as the Chief Investment Officer for at least one portfolio meeting of the class. The CIO will be responsible for organizing and chairing the class including all introductions, time and recordkeeping, conducting votes on recommendation, and maintaining order. Every class will include a brief presentation by the students regarding new information about their sector or securities included in the Siena Fund. New information about the company’s financial conditions, industry/sector news, stock price movements, and trading volume trends are considered to be pertinent and should be communicated to the class.
Students will also be assigned to assist in various administrative functions throughout the semester including: portfolio accounting, securities trading, portfolio reporting and benchmarking, newsletter writing, public relations, report writing, and helping to arrange outside speakers and trips.

Weekly and Annual Reports

At the end of each week a student will be selected by the professor to prepare an internal report of the Siena Fund’s current holdings. The report will include all currently active positions and give some indication of the returns on each security for the week, the semester-to-date, and the school-year-to-date. In addition, similar performance figures should be presented for the entire Siena Fund. The corresponding benchmark returns also will be provided for comparative purposes.

All of the students will prepare reports detailing the securities in their industry/sector’s performance throughout the semester and at the end of the semester. The final annual report, which will be presented to the Investment Advisory Board, will contain an overview of the results of the chosen investment strategy, a summary of each security included in the Siena Fund throughout the semester, the performance of the portfolio relative to appropriate benchmarks, and expectations for the near future. The annual report will be of high quality and will be made available via the CGFS web page to the general public.

Final Report Process

  1. Create an outline for the report.
  2. Write or update the overview and history section.
  3. Obtain copies of any articles about the Siena Fund.
  4. Write the structure section of the Siena Fund including member names.
  5. Write the cover letter for the Report.
  6. Submit a preliminary report to the Professor.
  7. Evaluate the portfolio’s performance relative to the established benchmarks.
  8. Document all transactions for the Siena Fund.
  9. Complete the draft report.
  10. Submit the draft report to the Professor.
  11. Revise the report and submit to the Professor.
  12. Post the annual report on the CGFS web site.