Claremont Students Identify
Five New Investment Strategies
Claremont Students Identify Five New Investment Strategies that Appear to Outperform the Market Lofty investment gains outpace the market during the last year.
Students from all over the globe in Claremont Graduate University’s Financial Engineering and MBA programs had another successful year of investing, as they ended their latest fiscal year up almost 10%. The return outpaced the S&P 500 by 1.5% this past year.
Students in Claremont’s Masters in Financial Engineering program and the Drucker MBA Program annually invest what began as a $300,000 endowment established from Henry Kravis, cofounder of Kohlberg, Kravis, Roberts, and Co., one of the leading private equity firms in the world. Since 2001, the Asset Management Practicum fund has grown to $381,123. The Asset Management Practicum is a required course within the Drucker School’s MSFE program and an elective for MBA students.
This year’s class tested new financial hypothesis using five strategies including the 2-Year Momentum Strategy, which is built on prior academic research which suggested that stocks that had negative return in the first year and positive return in the second year would be likely to have positive return in the third year.
Other strategies used were The Value Strategy, The High-Dividend Yield Strategy, the American Deposit Receipts (ADR) Momentum Strategy and the VIX Strategy. Each strategy is based on some prior academic research that implies a potential opportunity "The academic learning curve in this class is very steep. And on top of that, we learned more about leadership and teamwork in this class than I thought would be possible in one semester," said student Christopher Martin, CEO of the 2007 Asset Management Practicum. Richard Smith, who co-directs the MSFE program and Claremont’s Venture Finance Institute, was impressed by the students’ results.
“I think the research results are extremely good. All five strategies the students studied appear to outperform the market,” Smith said. “Their success was a great surprise to me, but the rigorous discipline that the class uses to find and test strategies before implementation is why they succeeded.”
The class of 2007 boasts students from Thailand, Taiwan, India, China, Indonesia, Belgium, Burkina Faso, Columbia and the United States. They made the final presentations of their research and performance results on Tuesday, May 8 at the Drucker School's Burkle building located at 1021 N. Dartmouth Avenue in Claremont.
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