Student Managed Investment Fund

As of December 3^rdand 4^th, each respective classes asset allocation has been in line with the benchmark set earlier in the semester (90% Equity and 10% Fixed Income). The Monday SMIF Portfolio is holding an asset allocation of 89.79% Equity and 10.21% Fixed Income. Since taking over the SMIF Portfolio on April 30, 2018, the Monday portfolio has achieved a total return of 5.04%, which trails their benchmark by 186 basis points.

The Tuesday SMIF Portfolio is holding an asset allocation of 89.57% Equity, 10.16% Fixed Income, and 0.27% Cash. Since taking over the SMIF Portfolio on April 30, 2018, the portfolio has achieved a total return of 5.67%, which trails our benchmark by 42 basis parts. Our benchmark is a blended benchmark consisting of 90% S&P 500 Index and 10% Barclay’s US Aggregate Bond Index. The majority of our achieved return can be attributed to the Information Technology and Health Care sectors of the total SMIF Portfolio.

In the early part of the semester, SMIF also selected target sector weightings for the equity position of the portfolios. The current weightings can be seen in the tables below for each respective class. Depending on our future outlooks, we will look into adjusting our target weights next semester.

Figure 1: Monday SMIF Equity Sector Weightings 12/3 Compared to SMIF Sector Targets

Figure 2: Tuesday SMIF Equity Sector Weightings 12/4 Compared to SMIF Sector Targets

Chris Esernio ’19 pitched McDonald’s (MCD) to the Student Management Investment Fund (SMIF) on November 12, 2018. Founded in 1948, McDonald’s brand mission is to be their customers’ favorite place and way to eat and drink. With over 37,000 locations in over 100 countries and a market cap of $140 billion, McDonald’s has an enormous global influence. Forbes recently ranked the company as the 11th most valuable brand in the world and the most valuable brand in the restaurant industry. The new CEO Steve Easterbrook has led a complete transformation of the company with a franchising initiative after taking over in 2015. This strategy strives for the company to be 95% franchised in the long-term and has thus far vastly improved margins. Currently, MCD is 91% franchised and had revenues of $22.3 billion in 2017. MCD looks to continue to expand in the coffee, breakfast, and delivery segments in order to drive future growth. MCD released exceptional financial results for the third quarter of 2018, highlighted by significant same store sales growth domestically and abroad. The class voted to buy 55 shares of MCD at $184.24.

Mary Anne Click ’19 pitched Lululemon Athletics to the Student Management Investment Fund (SMIF) on November 12, 2018.  Founded in 1998, Lululemon’s mission is to provide individuals with the best athletic clothes possible to help them achieve their goals.  Lululemon is much more than just a retail brand; they strive to create a community among their consumers by promoting healthy lifestyles and actively engaging in the fitness community across the globe.  Starting from just producing yoga clothes, Lululemon has expanded their product offerings to include lines for almost any athletic endeavor, ranging from surfing to CrossFit to dance.  Additionally, the organization prides themselves on marketing through authentic individuals leading healthy lifestyles who are visible in their own communities versus an emphasis on expensive celebrity athlete campaigns.  Over the course of this calendar year, Lululemon has continued to grow at an astonishing rate through their physical footprint and their digital one, which has doubled their market capital. The class voted to buy 70 shares of LULU at $139.67.

On Monday, November 5th, Ella Ri pitched Adobe Systems, Inc. (NASDAQ: ADBE) to add to the Information Technology Sector holdings.  Adobe is a diversified software company with three main business segments: Digital Media, Digital Experience, and Publishing.  Ella expects strong revenue growth over the next few years due to Adobe’s technological investments in AI and cloud, its timely move into the Digital Experience market, and its ability to capture industry trends such as a rising importance of content creation.  Adobe’s recent acquisitions of marketing management and analytics companies will allow it to further expand its Digital Experience capabilities.  Additionally, Adobe’s large partnership network of 5,000 media agencies, software vendors, and system integrators will facilitate customer base expansion.  She also believes that Adobe’s $8B share buyback program through fiscal year 2021 is favorable for shareholders.  The class purchased 50 shares of ADBE totaling $11,800. This transaction makes ADBE more than 1% of Monday’s SMIF portfolio.