FUNDS

Virtual FUND 2023/24

This year we are launching the Virtual Fund Challenge in a new format to make it a more interesting and insightful experience for members. We are changing the format to make everyone involved in the challenge, so that LUUTIS members can gain more practical and soft skills from it, but also to make it a more enjoyable and rewarding experience.

Structure:

This new format will ideally consist of 5-6 teams, each comprising of 1 Portfolio Manager and around 8 Analysts. These figures are subject to change according to interest in the challenge. The Virtual Fund Challenge will be overseen by 2 Fund Managers.

Organisation & Responsibilities:

Everyone participating in the challenge will be invited to an induction video call as well as monthly calls hosted by the Fund Managers to clarify the performance of other teams and answer any questions that anyone may have.

The responsibility of Analysts is moving to a more structured approach, while maintaining the freedoms that were introduced in the previous iteration of the Virtual Fund Challenge. This involves supplying analysts with a template for a brief stock pitch, which includes what information to gather and some suggestions on where to find this information. Examples of completed templates will also be included for reference. The aim of this is to make meetings more structured and accessible to those that are unsure of where to start. It is not required that analysts use these templates, but for the sake of consistency and simplicity it is recommended.

Analysts will research any non-levered security of their choice, allowing them to experience working with any financial market they wish. They will then use this research to produce a pitch using either the provided template or their own structure. This pitch is to be presented at the Analyst’s team meeting, where they will communicate to their team the reasons to invest in that security.

Portfolio managers will oversee organising and leading the weekly 1-hour in-person meetings with their team, as well as executing trades on the securities that are pitched in these meetings, should they be selected for investment. Optionally, Portfolio Managers are welcome to take on the responsibilities of Analysts alongside the duties of their role as Portfolio Manager.

Meeting format:

The meetings should involve at least 1 pitch from each Analyst, although it is recognised that this is not always possible – attendance is the priority, whether they bring a pitch with them or not they will still gain relevant skills through being involved in the team decision-making process. All Analysts who have produced a pitch should send their pitch to their team’s WhatsApp group so that anyone not in attendance still has the option to communicate their pitch and vote on their team’s pitches.

The decision to invest a portion of your team’s capital into the securities from the pitches is to be voted on at the end of each pitch by all members of the team, with all team members (including Analysts and Portfolio Managers) having equal voting rights. This vote should ideally be held using a poll on the team’s WhatsApp group, for the purpose of simplicity. Any pitch that receives votes from the majority of team members is to be traded by the Portfolio Manager.

Virtual FUND 2020/21

This year we will be running the virtual fund competition in a brand-new format for our members.

Last year, the competition comprised of one fund with four sectors beneath it. The fund was run by one Fund Manager and two Sector Heads leading each sector together with a team of analysts. The aim was to see which sector could generate maximum returns from investing and trading on markets.

Following feedback received on last year's competition, we came to the conclusion that the stock-picking in one specific sector does not provide our members with an adequate introduction to investing and the financial market. Therefore, this year the sectors will be removed and will be replaced by portfolios. The aim of the fund (portfolio) based approach is to enable our members to become exposed to the entire financial market and face the challenge of balancing risk versus reward, forcing them to take a longer-term market view.

There will be a Fund Manager responsible for the fund meetings. The Fund Manager will also invest in the market himself/herself to be able to talk the fund through his/her thinking process. We aim to have 4 portfolios led by two Portfolio Managers responsible for running the portfolio. Some analysts in every fund will have an opportunity to be promoted to Senior Analysts.

After the Fund Manager pitches the market outlook, the fund will proceed to asset allocation and constructing the portfolio, deciding on the ratio of stocks versus bonds and keeping in consideration the currency risk. Finally, the analysts will be responsible for deciding the stock sectors and bond types they want to invest in.

Although the structure of the Virtual Fund has been adjusted, the ways in which we conduct meetings will be much the same. The meetings will continue to be both instructional and practical so that everyone can develop their trading skills. We shall begin with the very basics in trading, allowing people of all abilities to participate. We want to make the fund as accessible as possible.

We use Exante as our platform for placing trades. Exante allows us to capture an incredibly broad range of investments and having used it in the past, is something we are very familiar with! This allows members interested in becoming analysts to research an area they find interesting, one which they may also choose to pursue for their future careers.

If you are interested in taking further steps towards a career in finance, we strongly recommend that you become and an active member of the Fund.

VALUE FUND 2019/20

Welcome to the Global Value Equity Fund!

We are a group of value investors who rely primarily on fundamental analysis to calculate aspects of equities such as intrinsic enterprise value. Our fund philosophy is principally concerned with the safe return of capital and thereafter an adequate return on invested funds. We buy at significant margins of safety and only sell if prices become grossly overvalued by our analysis metrics.

We are contrarian investors at heart who do not believe in efficient market theory over long term horizons. Since our virtual fund runs over the course of an academic year, we seek shorter-term returns by buying severely mispriced stocks, particularly when mispriced by transient market sentiment since sentimentally, rather than fundamentally, priced stocks tend to revert to the long-term average intrinsic value over relatively short-term horizons.

We are chiefly interested in five key market sectors, namely:

Consumer discretionary and staples
Financials
Technology, Media and Telecommunications (TMT)
Foreign Exchange (Forex)

We look forward to operating in a rather unprecedented generally overpriced era with very low interest rates and high levels of QE persisting globally. Identifying value can therefore be challenging but we are up to the task!

VALUE FUND 2018/19

Welcome to the Global Value Equity Fund!

We are a group of value investors who rely primarily on fundamental analysis to calculate aspects of equities such as intrinsic enterprise value. Our fund philosophy is principally concerned with the safe return of capital and thereafter an adequate return on invested funds. We buy at significant margins of safety and only sell if prices become grossly overvalued by our analysis metrics.

We are contrarian investors at heart who do not believe in efficient market theory over long term horizons. Since our virtual fund runs over the course of an academic year, we seek shorter-term returns by buying severely mispriced stocks, particularly when mispriced by transient market sentiment since sentimentally, rather than fundamentally, priced stocks tend to revert to the long-term average intrinsic value over relatively short-term horizons.

We are chiefly interested in five key market sectors, namely:

Consumer discretionary and staples
Financials
Technology, Media and Telecommunications (TMT)
Foreign Exchange (Forex)
Commodities

We look forward to operating in a rather unprecedented generally overpriced era with very low interest rates and high levels of QE persisting globally. Identifying value can therefore be challenging but we are up to the task!

MACRO FUND 2017/18

The LUUTIS Macro Fund is a multi-sector and multiple asset-class investment fund, focusing on employing ‘Macro Strategies’ to realise relative and absolute returns.

Specifically, the Macro Fund seeks to compose a portfolio of equity-based and currency-based assets which complement and capitalise on the predictions made by the Fund’s Analysts and Sector Heads. Investment opportunities may arise from a plethora of global, continental, national or regional news, events and trends. The predictions which Fund Members make in relation to these opportunities will develop into the overall rationale behind going Long or Short position on a particular asset.

Given the nature of the opportunities which fall into the Macro Investment Strategy, the Macro Fund is able to engage in more far-reaching, fast-paced investment opportunities. This contributes to an exciting and persistently evolving investment approach, with a variety of different approaches to capitalising on specific Macro predictions.

In terms of structure, the Fund is comprised of three sectors; Foreign Exchange, Emerging Markets and Macro Equities (Developed Markets). These sectors are, in turn, lead by an experienced team of Sector Heads who coordinate investment opportunities among sector sub-teams. While investment will predominantly come in the form of a Long or Short position in either an equity (stock) or currency, the nature of the investment strategy lends itself to the use or more complex equity/foreign exchange based derivatives and, in some cases, fixed income products.

Equity FUND 2016/17

We are managing a primarily long value equity fund with a maximum short position of 30% of the portfolio. We do not believe the market is strong or semi-strong efficient in the short-run, however, we do believe that prices and intrinsic values of assets converge in the long run. As a result, our aim is to exploit this short-term inefficiency by buying/shorting under-/over- valued assets and holding them until they, in our opinion, reach their appropriate price.

Our investing process is principally bottom-up as we believe it is easier to gain a knowledge advantage on individual companies than on whole markets or economies. Hence, we aim to know-the-knowable better than our peers and intend to achieve superior investment results based on our proprietary company specific research.

Furthermore, we believe too much diversification can diversify away our returns and hence are proud active investors in a small portfolio of assets that we are confident in.

At this moment in time our fund is split into three areas:

Technology
Energy and Healthcare
Financial Institutions and Consumer Services