RPI’s James Fund: ETFs, Decision Making, and Manager Transitions

Managerial Finance - Special Issue on Student Managed Investment Programs, Forthcoming

24 Pages Posted: 25 Oct 2018

See all articles by Thomas Shohfi

Thomas Shohfi

Rensselaer Polytechnic Institute (RPI) - Department of Finance and Accounting

Date Written: September 25, 2018

Abstract

The James Fund at Rensselaer Polytechnic Institute’s Lally School of Management is a small, recently established, course-driven student managed investment fund. The findings of this case study seek to provide insight to new and existing funds in improving individual fund operation and structure. The James Fund seeks to outperform an 80/20 equity/fixed income benchmark by investing exclusively in Exchange Traded Funds (ETFs) and to move primary emphasis away from idiosyncratic risk and individual equity valuation back towards asset allocation, the most significant driver of portfolio performance. Buy and sell decisions must receive a 3/5ths majority in voting among students and adhere with the investment policy statement. Groupthink, a common problem in student managed funds, is observed in trade proposal and manager voting patterns. It is partially addressed through the use of instructor feedback on individual student trade diaries. Student managers transition each semester therefore the portfolio must meet dormant period criteria limited to a specific list of broadly diversified ETFs, mitigating potential problems from knowledge transfer between management teams that are largely unexamined in the context of student managed investment funds.

Keywords: Student Managed Funds, Student Managed Investment Programs, ETFs, Groupthink, Knowledge Transfer, Manager Turnover

JEL Classification: A22, A23, G11, G41

Suggested Citation

Shohfi, Thomas, RPI’s James Fund: ETFs, Decision Making, and Manager Transitions (September 25, 2018). Managerial Finance - Special Issue on Student Managed Investment Programs, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3255155

Thomas Shohfi (Contact Author)

Rensselaer Polytechnic Institute (RPI) - Department of Finance and Accounting ( email )

Pittsburgh Building
110 8th street
Troy, NY 12180
United States

HOME PAGE: http://shohfi.com/

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