Dolan School Junior Named Finalist in ETF Global Portfolio Challenge
At the conclusion of last semester Dolan School of Business student Matt Parron '17 took 5th place in the Exchange Traded Funds (ETF) Global Portfolio Challenge, organized by the firm, Global Trading. Parron was introduced to the competition by Dr. Nazli Sila Alan, assistant professor of finance, who assigned the competition as an extra credit assignment.
“At the beginning of last semester Bryan Fitzgerald ’00 contacted me about a portfolio challenge his firm, Global Trading, was running,” explained Dr. Alan. “The Challenge consisted of an ETF trading contest I thought would be interesting for my students and I assigned it as extra credit. A few students signed up and one of them, Matthew, was the most engaged and updated me on his progress throughout the semester.”
We sat down with Parron to learn more about his experience and what he learned during the competition:
Q. Tell us why you decided to take Dr. Alan’s extra credit assignment and participate in the ETF Global Portfolio Challenge?
A. I have participated in other types of simulations before for other classes and the fact that this was a global competition interested me. I wanted to see what I knew compared to the thousands of other students who were competing from around the world. The contest was open to undergraduate and graduate students from four continents, and I knew this would be an interesting challenge.
Q. How was the competition structured?
A. The competition was an ETF (exchange traded fund) specific simulation, which made it unique because other simulations are usually open to all types of securities. Students were allowed four rebalancing days, so I bought my initial portfolio, assigned different weightings and was able to test my long-term strategy during the semester.
Q. How did you develop your portfolio?
A. Because of the uncertainty of whether the FED would raise interest rates or not, I chose to start my portfolio with SPY, the S&P 500 index and DIA and the Dow Jones index because they were doing really well at the time and were much less volatile. Overall I decided to take a risk-averse approach. I did take a few bets, including a Chinese biotech ETF to mix it up a little to diversify my portfolio. I also anticipated oil prices would continue to drop so I decided to invest in an ETF in the automobile sector. Automobile sales in America have been the highest they have been in 15 years so I selected an ETF called CARZ, a pool of American automobile companies that had recently done very well.
Q. What did you learn from this project?
A. The biggest lesson I took away was to trust your research. Stocks are going to go up and down, so it’s important to go through financial statement to understand past performance and construct a portfolio that minimizes risk and has high returns. Doing my research helped me prepare for a long-term investment, and unless the stock was tanking, I didn’t sell. I had faith in my research and what I had learned.
Parron will be recognized this spring at the 2016 ETP Forum, the leading exchange-traded product conference in the country, on April 6 in New York City. His CV will be featured on all conference materials and his bio will be featured on the contest website.