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Student Managed Portfolio Project Holds Strong Through Unpredictable Year

Student Managed Portfolio Project

Investing is no easy feat. Whether you’re a veteran or new to the game, the financial market is often unpredictable and presents a precarious landscape. However, with risks come rewards, as a group of Cal Poly students have discovered. Over the course of this last year, a group of Cal Poly finance students have been responsible for investing hundreds of thousands of dollars of real money into the financial market. Through the hands-on Student Managed Portfolio Project (SMPP), this group has put Cal Poly’s Learn by Doing philosophy to the test.

For a select group of senior finance students, the SMPP provides the ability to experience the ups and downs of an ever-changing stock market and the responsibility of managing nearly half a million dollars of Corporation funds with the goal of beating the returns on the VIG Dividend Appreciation Index by 1 percent per year. This year also presented an interesting challenge, as geopolitical changes like the U.S. presidential election provided many uncertainties for the team to face.

To begin the year, the group assessed the portfolio from the previous year to determine their starting point. Tasked with making real-time market decisions, each student was then assigned a company’s stock and had to closely monitor its earning reports, market conditions and analyst reports. Students also had to stay up-to-date on changes in the election and legislation, as its unpredictability presented potential risk to the market. After Trump’s election, the team had to consider the effects of his plans for corporate tax cuts and border-adjustment tax on their assigned companies.

With the responsibility of handling over a half a million dollars, every decision made was important. In spring quarter, Orfalea College of Business students Brandon Becker, Greg Benedikt, Jordan Smith, Koll Roberts, and Dario Buechi (featured above) presented the class’s outcomes to the Cal Poly Corporation’s Board of Directors on this year’s investments. As a class, the students decided to liquidate a third of their assets to cash as a precautionary move in case there would be any serious pullback in the market from the election. Over time, however, they came to realize they had missed some opportunity as the market instead remained stable or even benefited after the election. While their hesitancy in the market may have caused for some missed opportunity, the team still managed to gain a 7.01 percent return on this year’s portfolio, which beat the VIG Appreciation ETF by .38 percent. Orfalea College of Business students Brandon Becker, Greg Benedikt, Jordan Smith, Koll Roberts, and Dario Buechi (featured above) presented the class’s outcomes to the Cal Poly Corporation’s Board of Directors on this year’s investments.

“This was truly Learn by Doing,” said Greg Benedikt, one of this year’s SMPP students. “When thousands of dollars are on the line, due diligence is extremely important and the real money aspect added excitement to each decision we made as a class.”

The Orfalea College of Business has conducted the SMPP as the capstone experience in the finance concentration since 1992. Led by Professor Cyrus Ramezani, the class follows a real-world relationship between a client (the Corporation) and its adviser (the SMPP students).

Looking towards the future, the team’s goal is to invest the leftover cash from their liquidated assets. This will provide students who inherit the portfolio next year with an excellent starting place.

Posted May 23, 2017

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