Management Of The University Of Pittsburgh's Young Money Novelists
1254 WordsFeb 16, 20166 Pages
This Investment Policy Statement is composed for the purpose of guiding the formation of a mindful investment schema for the management of the University of Pittsburgh’s Young Money Novelists (YMN) Investment Fund, and is comprised of three main sections in accordance with the critical methods of portfolio management (planning, execution, and feedback).
a. Background – The YMN Fund began after a successful bank robbery, thanks to the effort of three devious masterminds and two recently deceased motley fools – may they rest in peace. Net profits from the heist is currently valued at approximately $10 million (after laundering, and the purchase of three beautiful Lamborghinis). The YMA Fellowship (the “Fellowship”) is not…show more content…
The YMN Fund is bound by several constraints that will define the nature of its allocation. The first is it’s time horizon of approximately two months. This will need to be considered when taking into consideration the methods of diversification that will be used so that they can be juxtaposed fairly in retrospect. The other two, less considerably, are a lack of income and taxation on gains, which hopefully will balance each other in some respects. The overarching objective for each of what will be three segmented funds will be to outperform the market’s expected return with different levels of risk.
We will act in regard to the current bearish market conditions by dividing the YMA fund into 20% income/commodity assets, 70% equities, and 10% cash for tactical market positions as they appear. Through these diversified funds we will attempt to outperform the market and obtain the necessary data to pursue our educational novel. i. Risk Tolerance – Given the time horizon and need for liquidity, the YMN Fund will be aggressive, but measured. With an allowed volatility (standard deviation of 20-50%) based on short-run historical averages, the fund will be medium-risk, and assume a beta of 1.5, measured against the S&P 500 index. ii. Return Objective – The fund seeks a short-run total return proportional to its risk tolerance. Based on the segmented strategic asset allocation, the fund looks to receive a return