The BYCIG Fund
The BYCIG fund is the lifeblood of the BYCIG. It is the application sphere for all our members who wish to extend their learning into true financial markets. This fund is not merely for educational purposes — we are seeking alpha.
What is Aggregate Alpha?
The term aggregate alpha refers to the method of evaluating our funds’ successes. A variety of alpha alterations exist on Wall Street. Derived from the essential formula (Performance of Portfolio – Performance of Benchmark), Aggregate Alpha takes into account the learning of our members. Our benchmark is a portfolio made up of 40% Bloomberg Total Bond Index and 60% S&P 500. Look below to see some of the ways we go beyond simple alpha.
How much did our members learn?
We take into account the learning and advancement of our members. The way we measure this is by benchmarking their skills prior to their BYCIG experience and testing again following 3-month intervals of membership. We also ask them how much they feel they have learned.
Did everyone contribute?
We keep track of whose investment proposals are making it into the portfolio. By doing this we can quantify how well everyone is participating. This is vital to making members feel included and valued at the BYCIG.
Were we authentic in our decisions?
We make sure that all investments are original. We want to see ideas that come from observations in everyday life. By doing this, we can make our members into expert consumers who can learn about a company by using the product or experiencing the service.
Our investment advisory committee, made up of our best members, votes on all investment decisions. Every meeting of the committee includes an expert who can help critique proposals and who has an additional vote when sitting in.
Investment Strategy at the BYCIG
We believe that all investors, if acting in accordance with time tested and well researched principles, can beat the market. We also place emphasis on our fixed income portion which ensure consistent charitable outflow.
What is the breakdown?
Our portfolio is broken down into two segments. 1) 40% fixed income and 2) 60% student proposed equities.
What type of proposals?
Think Buffett and Burry. Moats, valuations, macro, and more. We try to think of everything.
Why fixed income?
We use the 40% fixed income (primarily government and BBB+) to fund our biannual charitable contributions.
Not at all. We make sure to educate all our members about a wide variety of investment strategies, going far beyond those that we use. Passive investing and ETF investing is one of the first things we teach our members.
We believe that learning to invest in companies and evaluate businesses is a more valuable skill then learning to place your money blindly into the S&P 500. We have found that evaluating investments creates an understanding of business that can be applied to future careers in management.
It depends on how often we are getting great proposals. Probably about one every two weeks but this is subject to fluctuation. We also commission briefings on equities the board is interested in and following the briefing we may request more investigation.
Our legal structure is quite simple. We are in the process of becoming a non-profit and a 501(c)3. Right now we are an LLC in Delaware with a clear purpose stated in our operating agreement. If we fail to abide by this purpose it is fraudulent. Our fund is run through Charles Schwab Organizational Brokerage.