Nova Students Portfolio
Objectives
Nova Students Portfolio is an active (long only) portfolio of stocks and bonds managed by a group of students from the Nova Masters in Finance under the supervision of the instructors.
It is a real life portfolio management experience, where the students can apply their theoretical investment knowledge in a practical forum. It is designed to work as a bridge between theory and practice, and to expose the students to some of the usual problems / tasks faced by professionals working in this area. The portfolio should be managed with the aim of generating a competitive risk-adjusted return for its investors with a medium / low risk profile.
General characterization
Code
2260
Credits
7
Responsible teacher
Gonçalo Ribeiro | Manuel Marecos
Hours
Weekly - Available soon
Total - Available soon
Teaching language
English
Prerequisites
n/a
Bibliography
Students are expected to conduct their own research from material available on Bloomberg/Eikon and on the Internet, namely market and company news, macroeconomic reports, research notes, company reports and papers / books on Investment strategies.
Some interesting books and papers:
"The Intelligent Investor", Benjamin Graham (on value stocks)
"Margin of Safety", Seth Klarman (on value stocks)
"One Up on Wall Street", Peter Lynch (on growth stocks)
"You can be a Stock Market Genius", Joel Greenblatt (on special situations)
"What Works on Wall Street", James O Shaughnessy (on predictive power of several factors
Teaching method
There is one investment committee per week lasting approximately 1h30m-2h. The committees consist of discussions about investment strategies, macroeconomic environment, trading ideas and risk assessment. Operational issues are also discussed at the end of each meeting. Students are expected to conduct their own research, prepare reports and present / sell their trading ideas to the group. There will be one weekly class during classes periods and sporadic classes outside the regular MSc schedule. Classes are not mandatory, but this is a hands-on course so participation is very important.
Evaluation method
This course is a full year assignment. Although ECTS are divided into S1 and S2, attendance to both semesters is mandatory. For this reason, the course is not open to students going on a mobility semester in S2. Assessment will be based on the individual contribution of each student to the management of the program in general and to the portfolio performance in particular. Both the overall portfolio performance relative to its benchmark and the performance of each students trading ideas will be considered as well as the quality of the reports produced. Given the nature of the program and the importance of team work, assessment will be based not only on the instructors review but also on peer review.
Subject matter
Each September a group of 20 students is selected to manage a long-only portfolio of approximately USD 430,000 (having start with USD 310,000), consisting of capital made available and belonging to Banco Invest (the Sponsor). During a 12 months period the students are responsible for all the tasks related to the active management of this portfolio, namely: designing a balanced investment strategy, doing macroeconomic research, making stock picks and security analysis, participating in investment committees, executing market orders, making the reconciliation of the portfolio account, controlling the risk of the portfolio, preparing investor reports, among others. In addition to managing the portfolio, each student assumes a specific function on a temporary / rotating basis, to ensure the smooth operational management of the venture. The portfolio invests in stocks and bonds, in Europe and in the US. Positions can be taken not only in regular cash securities, but also in ETFs (namely in bonds, to allow for diversification) and in futures. While all positions are to be actively managed, namely to adjust for the risk environment, major focus is given to stock picking. Students may specialize in certain investment styles and groups may be allocated to those different styles (namely value, growth, momentum, special situations). There are weekly investment committees in which one student (the macro analyst) presents a macroeconomic view and then each of the remaining students presents his/her recommended stock picks to the group. If approved by the group these stock picks are included in the portfolio by a specific student (the trader) and verified by another student (the risk manager) on the following day. The instructor participates in the investment committees and gives orientation both in the discussions and the future research / analysis. He does not make formal lectures, with the exception of a few initial classes. He is also responsible for inviting professional asset managers to meet the group (in coordination with one student - the public relations). The portfolio should have a medium risk profile, with a target annual volatility in the region of 7%. One student (the risk manager) is responsible for monitoring the portfolio's risk and implementing the necessary adjustments. Another student (the portfolio manager) is responsible for diversification / avoid concentration. One student (the investor relations) is responsible for reporting to the Sponsor, on a monthly basis, the performance of the portfolio. He will also be responsible to manage the course website. The portfolio is property of the Sponsor, as well as all the profits and losses generated by its management.