The fund outperformed its blended benchmark for both the fall semester and the year to date, said Professor James R. Kelly, the fund’s professor and advisor.
For the semester, the fund was up 6.18 percent compared with the benchmark’s rise of 5.7 percent. For the year 2013 through November, the fund earned 11.62 percent to the benchmark’s 10.28 percent. The fund’s positive performance continued into December, too: For the full year, it earned 13.49 percent.
Managing directors Alexis Summit (GSB ’14), Dan DiDomenico (GSB ’13) and Muhammad Sarwar (GSB ’14) trace their team’s success to two types of wise choices: allocating funds into asset classes and choosing specific securities.
In terms of asset classes, the fund overweighted equities and real estate, and underweighted fixed income, foreign exchange and commodities. Students thought that the Fed would not taper its economic stimulus mechanisms between September and December. They were correct, leading to large gains in the stock market.
In terms of specific stocks, the team’s smart picks included Phillips 66, Disney, Lorillard and Pentair, which averaged a return of more than 17 percent.
The managing directors noted in their end-of-semester report that fall 2013 offered them enough surprises — from Fed decisions to the government shutdown — to provide an important lesson.
“The main takeaway is that it is always better to identify undervalued sectors and find investment ideas there rather than try to predict the overall market,” they concluded.
Congratulations to the entire fund team on a profitable fall 2013!
The Student Managed Investment Fund judges its performance against a blended benchmark consisting of the S&P Global 1200 Index, JPM Global Aggregate Bond Index, the Rogers International Commodity Index and the DJ Global Select REIT Index.