A Fund That Aids and Educates

The Harold Charno Investment Fund, was founded in the 1990s by a current Sy Syms School of Business professor and is a student-managed investment portfolio that aims to generate profits that will provide additional scholarship funding to students in need. It was seeded with a $100,000 donation from Harold Charno.

The fund itself is comprised of a stock broker who places the orders and acts as an advisor, a professor who oversees the fund and three current students who act as portfolio managers. Each year new portfolio managers are selected after going through a rigorous interview process. To get selected, managers must demonstrate an interest in finance and investing; an added bonus is having prior exposure to various investment vehicles.

The fund invests strictly in equities, steering clear of the bond market. To invest in an equity, the three portfolio managers choose a stock and pitch the investment to the professor. After both the professor and broker approve the stock pitch, an order is placed.

Isaac Shavrick, a current portfolio manager, explained that the fund tries to stay away from day trading — buying and selling of securities on the same day based on small price changes — and instead invests with a medium term horizon of three to six months.

One way the fund attempts to ensure success is through a strategic approach to predefined risk with stop loss point on each position. Shavrick added that the fund tries to invest in companies with a maximum beta — a measure of how volatile a stock is relative to the market — of 1.5. Dedication to the fund is another factor that ensures success. Managers make sure to follow the market closely while adopting and implementing strategies according to news, empirical data and technical and fundamental analysis in an effort to outperform the market.

Since its inception, the fund’s assets have been fairly volatile, up 30% last year, generating $30,000 in scholarship money. When asking about the fund’s greatest success, Shavrick spoke about a time where assets were at $250,000, achieved through positive investment performance, as opposed to an additional capital raise. However, he did speak of a time where the fund’s assets sank below Charno’s initial investment of $100,000.

When the fund’s assets grow far above $100,000, managers sell their positions and revert back to their initial fund size of $100,000. The current portfolio managers said that six months into their tenures they liquidated half of the portfolio to reset their portfolio in an effort to generate profits with new investments.

The Charno Investment Fund’s continued existence is impressive because funds of this type typically shut down after a few years due to lack of supervision and large amounts of day trading. Due to the managers’ dedication and hard work, scholarship money is generated and the fund is alive and well today.

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Photo Caption: Isaac Shavrick, one of the three Harold Charno Investment Fund Portfolio Managers.