Tareq discusses options with his cohort and faculty
In the Securities Analysis Center at the Lundquist College of Business, a small group of MBAs will get to make a lasting impact on future classes’ abilities to gain industry leading skills and knowledge bases in world financial markets. The group is doing so through the Emerging Markets Equity Portfolio, a cutting-edge initiative that draws on the group’s international makeup and interests. Tareq AlMusharaf, a second year MBA from Riyadh, Saudi Arabia, took a moment to answer questions about the portfolio, its purpose, and why he got involved.
Q: So, Tareq, in a nutshell, how did the Emerging Markets Equity Portfolio (EMEP) get its start?
This was a faculty initiative, starting with Wayne Mikkelson and John Chalmers in the Finance department. I believe they wanted to capitalize on the fact that there was a small, yet diverse SAC class; through combining our individual experiences (three of the four team members are from emerging markets) we were able to generate a portfolio investment model that is feasible and replicable at the University of Oregon.
Q: What do you feel was the primary driving force behind the group of MBA’s that got involved?
The driving force was definitely the challenge of replicating a structure that usually costs hundreds of thousands of dollars in expenses annually, to one with a fraction of those expenses.
Q: Why did you get involved?
This is my Strategic Planning Project (SPP) graduation project. I also have worked in the mutual funds business for seven years, hence this related to my previous knowledge.
Q: When comparing this fund to the current University of Oregon Investment Group’s (UOIG) fund, what makes this one fundamentally different?
The UOIG fund is a great platform for undergraduates to hit the job market with hands on analysis and portfolio management experience. The MBA run Emerging Markets Equity Portfolio, however, offers a more advanced level of complexity and exposure to its participants.
Q: How does that difference change the management and investment approach for everyone involved?
The main difference in approach comes from the additional layers of analysis. One is country analysis, which includes the economics and politics of the relative country. Secondly, there has to be a thorough information analysis, as required levels of disclosure are different from those of the USA. There is also more weight on economic and life cycle analysis, as emerging markets all have an initial boom which provides superior return when compared to developed markets. Our objective is to invest in industries that have a better chance of prospering from those economic booms.
Q: What’s something most people don’t understand about what you all are trying to do with the EMEP?
I think that the success of this fund would definitely prove the success of simpler models. In other words, sticking to the basics pays off.
Q: When somebody gets experience with the EMEP, how is that going to help him or her understand world markets beyond an academic perspective?
Analyzing an EMEP company goes beyond financial statements and industry growth. The person involved must understand the country, its driving forces, cultural preferences and values, in addition to many more qualitative aspects of individual countries. The analyst must also be able transfer the acquired knowledge and replicate the same information for other markets. In other words, it would give anyone involved a greater global perspective to evaluate qualitative factors along with traditional quantitative decision criteria.
Q: What’s the best part of this experience, in your opinion?
The best part is the ability to plan for others who will manage the fund, and the ability to monitor the results in the future.
Q: Ultimately, what would you say success looks like for the EMEP?
Success for the EMEP is the ability to be fully invested in companies within three years after launching the portfolio (with no investment in the tracker fund), while simultaneously outperforming the benchmark.
Sean Golin, a second year MBA from Colorado, gives a brief overview of what tools and research students in the Securities Analysis Center use when selecting the companies that will make up the Emerging Markets Equity Portfolio.