This year we will be running the virtual fund competition in a slightly new format for our members.
Last year, the competition comprised of two competing mutual funds with the aim to see who can generate maximum returns from investing and trading on the markets. The funds were run much like a multi-asset fund team would be in an investment management firm, where each fund was headed up by the fund managers alongside their sector heads and joined by a team of analysts.
Following feedback received on last year's competition, we have made some changes in order to facilitate some improvements. This year we will we will be running a Value Fund and a Macro Fund. Descriptions of these can be found below.
Although the structure of the society has been adjusted, the ways in which we conduct meetings will be much the same, albeit more regular. The meetings will continue to be both instructional and practical so that everyone can take away some skills in investment management (portfolio management) fundamentals analysis (Ratios, micro/macro analysis) and valuation (DCFs) from participating. This year we also will also focus on understanding various investment strategies and discuss the dynamics of active and passive trading.
We use IG and Bloomberg as our platforms for placing trades. They allow us to capture an incredibly broad investment universe whether that be futures, FX pairings, equities, IPOs or Feeder Cattle! This allows members interested in becoming analysts to research an area they potentially desire to enter into in their future careers. The Bloomberg terminal room in the business school is an invaluable resource to analyse the markets and potential trade ideas. We run Bloomberg workshops as well so that our members have a strong technical acumen when it comes to using a Bloomberg system in internships or graduate roles. We encourage all our members to take the Bloomberg Market Concepts (BMC) certificate.
If you are interested in taking further steps towards a career in finance, we strongly recommend that you become and an active member of a sector team.
Value Fund 2017/18
Welcome to the Global Value Equity Fund!
We are a group of value investors who rely primarily on fundamental analysis to calculate aspects of equities such as intrinsic enterprise value. Our fund philosophy is principally concerned with the safe return of capital and thereafter an adequate return on invested funds. We buy at significant margins of safety and only sell if prices become grossly overvalued by our analysis metrics.
We are contrarian investors at heart who do not believe in efficient market theory over long term horizons. Since our virtual fund runs over the course of an academic year, we seek shorter-term returns by buying severely mispriced stocks, particularly when mispriced by transient market sentiment since sentimentally, rather than fundamentally, priced stocks tend to revert to the long-term average intrinsic value over relatively short-term horizons.
We are chiefly interested in six key market sectors, namely:
- Consumer discretionary and staples
- Energy and utilities
- Industrials and materials
- Technology and telecommunications
We look forward to operating in a rather unprecedented generally overpriced era with very low interest rates and high levels of QE persisting globally. Identifying value can therefore be challenging but we are up to the task!
Macro Fund 2017/18
The LUUTIS Macro Fund is a multi-sector and multiple asset-class investment fund, focusing on employing ‘Macro Strategies’ to realise relative and absolute returns.
Specifically, the Macro Fund seeks to compose a portfolio of equity-based and currency-based assets which complement and capitalise on the predictions made by the Fund’s Analysts and Sector Heads. Investment opportunities may arise from a plethora of global, continental, national or regional news, events and trends. The predictions which Fund Members make in relation to these opportunities will develop into the overall rationale behind going Long or Short position on a particular asset.
Given the nature of the opportunities which fall into the Macro Investment Strategy, the Macro Fund is able to engage in more far-reaching, fast-paced investment opportunities. This contributes to an exciting and persistently evolving investment approach, with a variety of different approaches to capitalising on specific Macro predictions.
In terms of structure, the Fund is comprised of three sectors; Foreign Exchange, Emerging Markets and Macro Equities (Developed Markets). These sectors are, in turn, lead by an experienced team of Sector Heads who coordinate investment opportunities among sector sub-teams. While investment will predominantly come in the form of a Long or Short position in either an equity (stock) or currency, the nature of the investment strategy lends itself to the use or more complex equity/foreign exchange based derivatives and, in some cases, fixed income products.
Equity Fund 2016/17
We are managing a primarily long value equity fund with a maximum short position of 30% of the portfolio. We do not believe the market is strong or semi-strong efficient in the short-run, however, we do believe that prices and intrinsic values of assets converge in the long run. As a result, our aim is to exploit this short-term inefficiency by buying/shorting under-/over- valued assets and holding them until they, in our opinion, reach their appropriate price.
Our investing process is principally bottom-up as we believe it is easier to gain a knowledge advantage on individual companies than on whole markets or economies. Hence, we aim to know-the-knowable better than our peers and intend to achieve superior investment results based on our proprietary company specific research.
Furthermore, we believe too much diversification can diversify away our returns and hence are proud active investors in a small portfolio of assets that we are confident in.
At this moment in time our fund is split into three areas:
- Energy and Healthcare
- Financial Institutions and Consumer Services
Multi-Asset Fund 2016/17
Our investing philosophy is based upon a strong belief in active fund management over medium to long term time horizons. Given the length of time that we have together as a fund before the academic year finishes, our time horizons have been restricted. Nevertheless, we believe that markets are overly short term focused and we aim to target long positions to be held for a minimum duration of month. We believe in the principle of diversification and aim to have a minimum of 30 assets in our portfolio. Our process involves combinations of top down and bottom-up approaches as we believe that although it may be easier to gain a knowledge advantage on individual companies, it is also highly beneficial to base investment decisions on strong macro economic data.
Hence, we aim to know-the-knowable better than our peers and intend to achieve superior investment results based on our proprietary company specific research and overall market trends. It is important to have a view on where we are in terms of cycles and general trends and hence we utilise our overall portfolio structure to aggressively target the sectors we believe are miss-value and likely to outperform.
Our fund is split into 3 sectors:
- Technology and Forex