About The Fund

PRIME's Management History

PRIME has been under the stewardship of twenty-four management teams since its inception in September 1999. The first two served through the latter part of the dot-com bubble, and their returns demonstrate the agreeable nature of the market during this period. The third and fourth teams faced greater challenges, such as a mild recession in the United States, greater global conflict, increased market volatility, and the tragic events of September 11, 2001. But by the end of their tenure in May 2002, the portfolio had recovered its losses and surged forward to a new high. The fourth management team faced a bearish climate of uncertainty created by corporate scandal in the United States and extensive disappointment in the telecom services, info-tech and utilities sectors. By biasing asset allocation in favour of cash they were able to end PRIME's losses in Q3 2002. The PRIME Fund eclipsed the $1,000,000 mark near the end of 2005 due to continuation of the bull market out of 2004 and increasing oil prices and continued growth in China which has helped strengthen the TSX. Nearing the end of 2006, fears of a slowing US economy had affected the PRIME Fund's performance nearing the end of 2006. During 2007 PRIME faced adversity with the credit crisis and residual effects of economic slowdown in the US. PRIME continued to face the unprecedented challenge in 2008, as the worst financial crisis in history continued throughout the year and major economies has entered into severe recession.

Funding History

At inception, a fund of $70,000 CAD was established, allowing students to make real-time trades and meaningful portfolio decisions. This fund was established by contributions from both the Edmonton Society of Financial Analysts and the Department of Finance and Management Science at the University of Alberta. In addition, Toronto Dominion provided funding along with several smaller donations from other companies. To date sponsors have contributed more than $670,000 to the program. Large blocks of funding came when PRIME was granted oversight of a portion of the Winspear Endowment by the Alberta School of Business and a portion of the University Endowment.

The Clients

As the original investors, the Department of Finance and Management Science and Society of Financial Analysts were the fund's first clients. Our current clients are the Department of Finance, the Alberta School of Business, and the University of Alberta. The clients are essentially the owners of the fund. The PRIME students simply manage it for them. These clients have placed restrictions on the make-up of the portfolio just as any normal risk averse client would do. Only Canadian equities with market capitalizations of at least $500 million and substantial liquidity are available for purchase. A single stock can only make up a 10% of the portfolios net worth, any sector can not account for more than 35% of the portfolio and there must a minimum of 20 stocks held at all times.

Investment Strategy

PRIME adheres to a 'Growth at a Reasonable Price' (GARP) strategy. Generally, we seek to identify high quality business' that are somewhat undervalued and demonstrate good earnings growth/potential.

The Challenge

The challenge taken up by PRIME students is to stay within the guidelines of the portfolio and invest in the most appropriate stocks. Company fundamentals and macroeconomic factors play a major part in the decision of where to invest. Students are constantly challenged by market fluctuations and short term trends. With the benchmark as the TSX composite index, managers and clients alike are not interested in making absolute returns, the goal is to beat the market. Knowing which stocks to invest in to beat a complex and dynamic market is a real challenge indeed.