As the second week of April rolls around, the Students in Money Management (SIMM) leadership team has already passed the baton to its new leaders for the 2019-2020 year. April 1 is SIMM’s year end, which proves to be a great time to change leaders. Having new managers take over at the end of the spring semester allows the old leadership to mentor as new leadership and offer feedback before graduation. The SIMM team has found this to be helpful and has also made efforts to start training new managers as early as March.
One of the first big tasks for the new managers is to prepare SIMM’s semi-annual reports for a meeting with SIMM’s own board of directors. The report is nothing short of what would be published by a real mutual fund, hedge fund with performance analysis, along with forward looking expectations for the markets. While the reports are produced by the new managers, it is a team effort to complete them. Everyone from a freshman member to a senior analyst of one of the sectors has skin in the game. Sometimes senior analysts or younger SIMM members have more knowledge about a particular stock that SIMM invested than the executive team.
Therefore, SIMM encourages younger members to attend the board meeting for experience, but also because the board could ask about an investment thesis for a certain company.
The most talked about discussions with the board usually involve benchmarks and SIMM’s financial performance in relation to the benchmark. The most widely used benchmark is the S&P 500, so it is usually the easiest to compare fund returns against. For SIMM, the benchmark is usually debated. SIMM uses a Morningstar size and style benchmark. What the Morningstar benchmark breaks down is the size of the companies, and whether a company is a growth company, a core or stable, company or a value or stagnant company. Morningstar then provides a matrix of the six criteria that SIMM can be compared against.
The usual debate with the SIMM board is the complexity of the Morningstar benchmark versus something like choosing the S&P 500. The only problem with using the S&P as the new benchmark is because SIMM isn’t always fully invested, meaning that SIMM holds cash and has specific allocations towards fixed-income (bonds). On the other hand, the S&P 500 index does not hold cash or have any bonds tying down investment returns for SIMM and more than likely causing under-performance to the S&P 500.
SIMM’s portfolio performed well this year, making around 10 percent from the start of the calendar year. As expected, SIMM underperformed the S&P 500 holdings, which returned around 14 percent since the beginning of January.
While performance on the surface seems like the most important goal for SIMM, involvement is what the management team often strives for. While it is great to make money and try to outperform the market, learning and growing as students remains the most important goal.
This year, SIMM has made strides to introduce a more international focus, along with creating sector coverage on what is happening in international markets. This has been great for involvement as SIMM does have international students that can help us leverage knowledge in other countries.
By Adam Talmadge, Staff Writer
talmadaj14@bonaventure.edu
