Applied Portfolio Management Program

The portfolio managers (or PMs) are students responsible for managing the fund. They make all the investment decisions, with input from the Investment Advisory Committee (IAC) and the program director. Five times throughout the term, the PMs present on the fund’s performance to the IAC. The presentation includes a report on: 

• asset allocation
• performance attribution
• risk
• environmental, social and governance (ESG) considerations
• any proposed changes to the holdings 

The PMs follow the APMP's responsible investment philosophy. This integrates ESG factors while focusing on a long‐term investment horizon. All portfolio managers communicate and collaborate with each other. It is important to do this on an ongoing basis and to come to a consensus on all major decisions. Each PM is in charge of monitoring news and financial market movements in 2 to 3 of the fund’s holdings, which they report to the other PMs. 

To qualify to become a portfolio manager, students must complete the Applied Investment Management Course (AIMC). UVic Continuing Studies offers this non-credit course from November to April each year. The Applied Investment Management Course is available to 16 students and taught online with classes one week out of every month. AIMC culminates with students making a stock pitch on a TSX‐listed company to a panel of industry professionals. Mr. Saurabh Suryavanshi teaches the AIMC. He is a portfolio manager at Dixon Mitchell Investment Counsel in Vancouver, BC. 

Following the completion of the AIMC, successful students apply to become portfolio managers (PMs) in June. During July and August, incoming portfolio managers are trained by the outgoing ones. Each September, they take over the fund and manage it for 12 months. 

The PMs work closely together as a team. They manage themselves, dividing the following tasks among the team:

• equity and fixed income research
• macroeconomic analysis
• asset allocation
• performance attribution
• risk management
• portfolio monitoring 

Communication skills are vital as students may be on exchange abroad or employed on internships during this 14‐month period.

The analysts support the portfolio managers throughout their term. They report to the PMs, who integrate their analysis into their decisions. 

To qualify, students must complete two Business or Economics courses and achieve a minimum grade of 80%. In September of their 4th year, we invite students to apply to become:

• ESG analysts
• equity analysts
• fixed income analysts
• economists
• risk managers 

Analysts support and report to the portfolio managers, who have ultimate decision‐making authority on the fund. These roles are for a minimum 8‐month term. Please note that exceptional analysts may be able to advance to more senior roles based on performance. 

The course requirements to apply for analyst positions are:

• Business path: complete COM 371 Management Finance in 3rd year followed by COM 445 Corporate Finance and Valuation in 4th year (summer semester).
• Economics path: complete ECON 305 Money and Banking followed by ECON 435 Financial Economics. 

Due to internship commitments or personal reasons, students may not have completed either COM 445 or ECON 435 by September of each year. In this case, exceptional candidates who are enrolled in one of these courses for the Fall semester (September‐December) may be invited to apply for analyst positions in September. Their participation in APMP is conditional on satisfactorily completing this course as a co‐requisite. 

Every September, the incoming portfolio managers hire two to three analysts to join the team. The PMs and analysts work collaboratively together and seek to reach a consensus on all decisions affecting the fund.

The Investment Policy Statement (IPS) outlines the APMP asset allocation. The  fund’s two clients, UVic Treasury and BC Investment Management Corporation (BCI), agree upon this asset allocation. The benchmark asset allocation is: 

• 30% Canadian equities (selected from the TSX Composite Index)
• 30% US equities (selected from the S&P 500 Index)
• 40% Canadian fixed income (investment grade only) 

The fund can operate outside these weights, by being overweight in some assets and underweight in others. It must never go over 70% equity or 50% fixed income. 

The fund's performance is benchmarked against three indices:

• 30% S&P/TSX Composite Index
• 30% S&P 500 Index
• 40% against the FTSE TMX Canadian Universe Bond Index 

The portfolio managers track the fund’s total return against this benchmark. At year‐end 2021, the fund underperformed the benchmark with a return of 15.03% vs. 15.35% for the benchmark. 

As of year‐end 2021, the fund was overweight in equity and underweight in fixed income with the following allocations:

• 3% Canadian equities
• 34% US equities
• 31.3% Canadian fixed income

The APMP’s investable universe is limited to Canadian and US equities exchanged on:

• the S&P/TSX Composite Index
• the S&P 500 Index 

In terms of fixed income securities, the fund is restricted to investment grade securities issued by Canadian listed companies, government, and government‐related institutions. The fund can also hold Exchange Traded Funds (ETFs) that hold securities in its investable universe. Furthermore, there is a regulation against the holding of derivative products as these are riskier assets. 

As of year‐end 2021, the fund held:

• 10 Canadian equities
• 11 US equities
• 2 fixed income bond ETFs
• a small amount of cash