You can use the following link to register for this tournament:
https://www.stocktrak.com:443/members/register?session=FIN3325InvestmentsFA2021 to activate your account. The fee for the service is $31.95. You can get a free stocktrak account from the coupon in the new textbook.
In this project you are assumed to act as a small hedge fund manager to maximize the portfolio’s rate of return in terms of the level of risks accepted over the 9-week simulation period. Due to the fact that hedge fund managers are commonly structured as private partnerships, and thus subject to only minimal SEC regulation, you can pursue various trading strategies and employ high leverage, heavy use of derivatives, and short sales, that are unavailable to the mutual fund manager. You are asked to design and execute an appropriate strategy to maximize the portfolio’s return. You are responsible for explicitly stating your primary investment objectives, formulating an appropriate investment strategy to meet the objectives, conducting the necessary research, selecting the appropriate securities, executing trades, tracking daily performance, and rebalancing the portfolio when necessary.
If you are not familiar with hedge funds, please refer to the following online video
https://www.youtube.com/watch?v=xmKDGFT3j8w
Required:
Each student has $1,000,000 and 200 trades to work with. And each of you must establish a minimum of 30 trades. The project will start on September 13, 2021, and end on November 13, 2021 (9 weeks total). Therefore, each student must make sure that s/he opens an account before September 13, 2021. You are also required not to hold more than 25% of your portfolio in one security.
Given to maximize the rate of return over the simulation period, each student must develop his/her asset allocation strategy, and select the appropriate benchmarks. A proxy for an appropriate benchmark can be found from a variety of ETFs, you can easily find ETFs’ information from yahoo.finance.com/etf. Understanding your benchmark can lead to views on sector underweight/overweight, and stock selection. You are required to invest in mutual funds, bonds, stocks, options, and futures contracts. Currency and commodities are optional, but encouraged. You should use all types of order to execute your strategies.
At the beginning you must justify your investment objectives and asset allocation strategies. You must hand in this part on September 27, 2021. The investment objective and asset allocation report must include
1) Discuss investment objectives, asset allocation strategies, planned trading strategies, choice of benchmark index which you try to beat.
2) Provide a matrix of the various positions that are expected during the semester. This matrix will include the various asset categories, names of some specific investments within each category, as well as a range, in dollar values, placed in each category (total $1,000,000).
3) You should also discuss the risk level (beta) by establishing an appropriate range to target over the 9-week period.