As portfolio managers, we establish investment parameters to align with market expectations for the academic year, ensuring a structured approach to portfolio construction, performance targets, and risk exposure. These parameters serve as a foundation for decision-making and portfolio governance. While they are reviewed and set at the beginning of each cohort, adjustments may be made in response to changing economic conditions or emerging investment opportunities.

Our risk-return framework balances long-term capital appreciation with active risk oversight, ensuring diversification, systematic rebalancing, and disciplined position sizing.

Performance Metrics 

• Total Return Target: 10.5%-11.5% – Expected portfolio return for 2026 based on strategy and market conditions.
• Alpha Target: 1.5% – Extra return above the benchmark driven by active management.
• Sharpe Ratio: 1 – Measures risk-adjusted performance using total volatility.
• Treynor Ratio: 0.07 – Evaluates return earned per unit of market risk.

• Annualized Standard Deviation: 15.5% – Keeping track of portfolio volatility.
• Beta: 0.9 – 1.1 – Portfolio aligned with overall market risk.
• Maximum Drawdown: No more than 10% more than S&P 500.
• Idiosyncratic Risk Limit: < 20% – Controls company-specific volatility.
• Value at Risk (VaR): <9% – Controlling extreme losses.

• Single Stock Exposure Cap: 5%- 10% – Mitigating Idiosyncratic risk. If exposure equals 10%, it will trigger a rebalance.
• Industry Exposure Cap: 30% – Limits concentration in any single sector.
• Rebalancing Frequency: Quarterly – Maintains alignment with target exposures.
• Limit On Number Of Positions: 100 – Systematic strategy counts as a single “position”.