Document Type

Investment Portfolio

Publication Date



SunTrust endowed this portfolio to provide scholarships for future Crummer students and to give current students a practical, hands on learning opportunity. This year we are pleased to be able to award $50,000 in scholarships. We are extremely grateful for SunTrust’s generosity and investment in higher education. We have all learned a great deal from this experience and the responsibility of managing real money. Our first challenge is to establish a portfolio position that takes advantage of economic opportunities while avoiding unnecessary risk and conforming to the Crummer SunTrust Investment Policy Statement (IPS). We are also tasked by the IPS to operate at two levels simultaneously tactical for the near term, and strategic for the long run. Additionally, this portfolio presents some unusual portfolio management challenges by trading only once a year, in early May. Our tactical approach began with a top down sector analysis. We established an economic forecast based on research and consultation with economists, including Professor William Seyfried of the Crummer School. That forecast then drove our allocation among the eleven S&P sectors: Communication Services, Consumer Discretionary, Consumer Staples, Energy, Financials, Healthcare, Industrials, Information Technology, Materials, Telecommunications, and Utilities. This year we have forecast slowing economic growth and tilted the allocation towards defensive sectors that are less sensitive to the business cycle. Our asset class allocation embodies the long run strategy of our portfolio. The IPS sets asset class ranges from low to moderate risk to keep the portfolio from being whipsawed by transitory market cycles. Our equity allocations entail a moderate level of risk, consistent with our view that the stock market will continue a modest upward trend between now and April 2020 . We maintain an allocation to a sector ETF in each sector to ensure diversification. Additionally, as a practical matter, we are limiting each sector to a maximum of two individual stocks. Fixed income is our anchor sector, providing a hedge against the risk of an economic slowdown adversely impacting our equity holdings We are at the middle of our IPS range for fixed income at 15 %, which is a n increase from the decision of 10% last year. Furthermore, we have incorporated a new theme in to our portfolio selection process related t o the rise of the global middle class. Inspired by Hans Roslings’ Factfulness, we believe there are systematic misunderstandings about the state of the world. The biases and ignorance of rich nations obfuscate the tremendous human progress that has taken p lace across the globe, record low poverty levels providing one noteworthy example. Our investment team is committed to capitalize on opportunities hidden in plain sight. Regardless of a security’s consistency with our theme, all recommendations must be undervalued after rigorous quantitative and qualitative analysis. Lastly, we believe that the economic merits of capitalism will prevail against the negative sentiments unfortunately gaining support in the United States. The innovative capacity of the free market will avail itself and continue to raise living standards across the globe.