It is with great pleasure that we congratulate our graduating Class of 2018. From the very first Client Committee meeting, this group of students showed a level of determination and enthusiasm that has served them well throughout a very challenging year.
As you may know, each group of second-year students takes over the management of the KWPMP’s real-money portfolio on January 1 of every year. They are free to make the changes they deem necessary to the portfolio to have it align with their investment outlook and philosophy. This is done within the constraints and controls that are in place and under the supervision of the program director, who maintains oversight over all trades and activities.
Most importantly, all such activities must adhere to the KWPMP’s Investment Policy, which outlines the permissible investments, asset class ranges, risks, and so on. Last year we officially incorporated Environmental, Social and Governance (ESG) criteria as part of the investment process. As a result, changes are not usually too dramatic. There is also a certain degree of continuity, as the new fund managers are very familiar with the portfolio, having acted as portfolio research associates during the previous year, helping the incumbent team with their investment activities.
One of the features students appreciate about the program is that they can introduce their own investment style each year. During their first presentation to the Client Committee they outline their investment philosophy and expectations, and obtain valuable feedback. The objective is to learn as much as possible from the investing of real money with the help of mentors, on-the-job training (summer internships), Client Committee input and their courses at the John Molson School of Business. They have a one-year time frame over which the portfolio’s performance will be measured against a stated benchmark. This, of course, is far too short a time horizon to reach any definitive conclusions concerning investment ability. However, it is worth noting that since inception, under the management of 19 different student cohorts, the portfolio has done exceedingly well, measuring up positively against most professional money managers’ results.
This past year, however, was a challenging one for the students. The portfolio was not able to beat the benchmark and its total value declined from $2,652,000 to $2,569,000.
Equities experienced a significant market sell-off at the end of 2018, though that was followed by a sharp snapback in the first quarter of 2019, which saw the fund quickly regain its 2018 losses after the year-end. The current market environment and the period used to measure performance are always important considerations, as it takes time and patience for longterm investments to realize their full potential.
In summing up the year and reporting their results to the Client Committee during their final presentation, the students reported that the fixed income component of the portfolio had performed rather nicely through some insightful, although limited, moves. The equity component did not fare so well. They thus proffered a number of examples of “lessons learned” that highlighted the educational value of real-money investing, proving the old adage that we often learn more from our “mistakes” than from our successes.
During the year it also become evident that changes at the University were coming that would have an impact both on our program and the John Molson School of Business. Reena Atanasiadis, the director of the KWPMP since 2013, would be transitioning out of that position in a timely manner and assuming her new role as the director of the JMSB’s MBA in Investment Management—a wonderful opportunity for her. Over the six years she has been at the helm of the KWPMP, Reena has done an absolutely outstanding job. She has taken it to what I consider the best-in-class in Canada, building on the great achievements of her predecessor, Professor Abraham Brodt. Reena has become a very good friend of the program, as well as of all the members of the Client Committee. We wish her the best for the future and know that she will always maintain a close connection to the KWPMP.
Reena was able to identify an exceptional person to succeed her as program director—Ms. Sukyong Yang, who comes to us with terrific credentials. With the endorsement and support of Dean Anne-Marie Croteau and a period of oversight by Reena, Sukyong will be an excellent addition to the program. I am confident she will lead it on an ever more fruitful path. We at the KWPMP all welcome Sukyong and look forward to many enjoyable years ahead working with her.