Loyola University Maryland

Sellinger Applied Portfolio Fund

Investment Policy

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Background and Learning Objectives

  • The Student-Managed Sellinger Applied Portfolio Fund “SAP Fund” was established to provide students with actual portfolio management experience exposure, including asset valuation, constraint setting asset allocation, asset selection, risk management, and performance evaluation
  • Each year the University may provide the SAP Fund with up to $500,000 to invest. These funds are a component of the University’s endowment. All investments within the SAP Fund are liquidated annually at the end of the course

Investment Philosophy

  • Allowable investments include:
    • U.S. exchange listed stocks, including ADRs.
      • Unleveraged ETFs, including stock index ETFs and Commodity ETFs
      • Only investment grade securities.
    • Unallowable investments include “sin” stocks, e.g., manufacturers of cigarettes, alcohol, firearms, or companies engaged in gambling activities. Moral and social considerations must be taken into consideration throughout the investment process, with emphasis on the United States Conference of Catholic Bishops principles of investments.

Investment Strategies

  • The primary investment strategy is to select stocks that are undervalued and will outperform their industry and the S&P 500 index over the course of the investment period
  • Diversification across sectors will be a key part of the investment strategy, although given market conditions in a particular time period, certain sectors may be significantly under-weighted and others over-weighted. Asset allocation targets include:
    • Not more than 10% will be invested in any one stock
    • Not more than 20% will be invested in a single sector
    • Not more than 25% will be invested in a single index
  • There will ordinarily be three types of investment strategies within the SAP Fund
    • A growth investment strategy
    • A value investment strategy
    • A dividend strategy
  • Depending on economic conditions during a given period, the SAP Fund may be more heavily weighted towards one or two of these investment strategies. The primary objective is to work towards a mix that includes:
    • 40% Value
    • 40% Growth
    • 20% Dividend
  • Rebalancing Criteria
    • The fund will be monitored and periodically rebalanced to ensure that the targets as specified in Investment Strategies, to ensure diversification, will be adhered to
    • Rebalancing may be necessary after re-evaluating positions in securities that have significantly underperformed and/or those that have significantly over performed resulting in these securities becoming temporarily overvalued
  • Proxy voting will be in agreement with company recommendations

Research Sources and Process

  • The primary research database will be the Reuters Eikon platform which is available to the students in the SELL
  • Additional research sources may include:
    • Company announcements
    • Global markets & foreign exchange
    • Inflation / unemployment / housing statistics
    • Consumer confidence
    • Interest rates and Federal Reserve announcements
    • Political news
  • Fundamental analysis / use of ratios and valuation models, to include debt ratios, ROA, ROE, P/E, PEG, current & quick ratios.