Class Letter

23th Sept 2009 ULSMP University of Limerick [email protected] Masters Students of Financial Services & Computational Finance,

Last year an idea was circulated to set up a University of Limerick Student Managed Portfolio (ULSMP). It was envisaged that this fund would give everyone the chance to participate in real investment decision making before leaving college. Prospective employers in certain areas of Finance look very favourably on those who have experience in trading real shares and derivatives. Many of the U.S. based universities have already established student investment funds that started with only a few thousand dollars. Some of the larger ones are now valued in the tens of millions of dollars. These types of fund are a relatively new concept in European and Irish universities so this could be an opportunity for us to steal a march over competing graduates from these colleges. Simulation, while important to learn both the basic and complex, is not the same as trading your own money. A fund whose investment strategies are decided by the students themselves will give them a real feeling for the markets and prepare them for the investment business. It is therefore proposed that a fund be set up with the students own investment. It would be expected that some of the faculty would also make an investment. The first year of the fund could be like a pilot program and if successful, funding from the college for the second year could be lobbied for. Any member would be allowed to propose an investment strategy. As long as a majority agree after discussion that proposal could result in an investment. Finbarr Murphy would be the faculty overseer and deal with the brokers. Given the intensity of the Masters programs it is advised that that the fund be established as soon as possible. Last year the workload towards the end of the semester proved too much to effectively organise things. Two of the investment ideas then were to invest in Irish Banks and DXOs. The DXO is a double-long oil index, whereby the price movements of oil are double the standard returns. This type of strategy incorporates some degree of leverage and had it been implemented we would have booked significant returns. Given that modules are covered concerning derivatives etc. the fund should actively seek investment styles other than just ‘buy and hold’ of blue chip shares. Anyone interested should read the rules and guidelines, consider how much they want to invest and fill out the membership to be left with Finbarr. (Closing date: 29nd September ’09)

Jim Redington M.Sc. Computational Finance ’08-‘09