Center for Advanced Financial Education (CAFE)
With a recent major grant from the E.L. Wiegand Foundation, the Gabelli School of Business nearly tripled the space of the Center for Advanced Financial Education (CAFE) and equipped it with enhanced state-of-the-art technology to provide students with hands-on training in securities analysis and portfolio management. Expanding the CAFE space enables more students to participate in one of GSB’s most highly visible programs, where students manage two real-dollar portfolios in real time – the CAFE Growth Fund and the Gabelli Value Fund.
The recently renovated CAFE replicates Wall Street’s analyst pods and trading rooms and boasts the latest financial platforms and technology found in industry, including Bloomberg and Moneynet.com resources, a real-time, large-screen stock ticker, desktop workstations and tablets. In addition to portfolio management, CAFE’s mission is to increase students’ exposure to career opportunities within the financial services industry through field trips to major financial markets throughout the United States and abroad. Students in the program have recently visited Hong Kong, Tokyo, Zurich and London to share their investing insights and receive feedback from international practitioners on their strategies.
Portfolio Management
CAFE Growth Fund and the Gabelli Value Fund
A major differentiating factor for the CAFE Portfolio Management Program is that student fund managers have the opportunity to manage two funds that have varying objectives. In doing so, they are better prepared to analyze a wide assortment of securities utilizing two vastly different techniques. The CAFE Growth Fund has a growth objective with a less than one year time horizon, focusing on investments that may be more cyclical in nature. This fund requires that the students do not inherit the prior semester’s fund, allowing them to participate in every stage of the portfolio construction process. Incorporating many of the principles of Value Investing by Graham and Dodd, the Gabelli Value Fund has a longer time horizon, targeting those undervalued companies that will experience appreciation over 1, 3 and 5 years.
Seminar Setting
Utilizing an innovative seminar setting, the Center deviates from the more traditional classroom setting in order to promote a more efficient flow of information. Every aspect of the CAFE design is geared towards replicating that found in industry today.
The CAFE provides state-of-the-art facilities – most notably real-time financial platforms such as Bloomberg and Money.Net - allowing students to invest and manage over a quarter of a million dollars of donated/endowed funds through CAFE Growth Fund and the Gabelli Value Fund.
Real-dollar fund management creates a dynamic, experiential environment that is invaluable to the students as they step into the world of finance. Utilizing the latest technology employed in the finance sector, the CAFE provides students with an opportunity to gain actual experience in portfolio management. Students learn the control for the inherent uncertainty of stock selection through proper analysis, and the time and effort required to manage a successful portfolio. Asset allocation, diversification, portfolio management and fundamental, behavioral and technical analyses are just some of the skills that the students develop in this class.
The portfolio teams consisting of 10 student fund managers perform all of their own research, calculations and data analysis. The student fund managers use investment tools and news outlets such as Bloomberg, Money.Net, Zacks, TD Ameritrade, Value Line Investment Survey and various other sources to compile information. Once the required information is collected the student managers then calculate their own fundamental data, i.e. Beta, P/E ratio, PEG, Enterprise Value, Return on Equity Ratio, Debt to Equity Ratio, Holding Period Yield and more, as well as constructing correlation matrices and modeling such components as the minimum variance portfolio (MVP).
A major differentiation between the Mario J. Gabelli School of Business CAFE Growth Fund and those of several schools is that the subsequent classes of student managers do not inherit the prior portfolio. This practice is necessary for students to learn the entire process of portfolio management – from the initial construction phase to the monitoring and evaluation phase. Another key differentiating factor is that the student fund managers only need approval for security from the Director, and not a Board of Advisors. This real world scenario allows for immediate trades that are also executed by the students fund managers.
Finance 450: Portfolio Management / Finance 430: Advanced Portfolio Management
pilipiliÎÛÂþ students have a unique opportunity to invest real-money using the latest analytical tools. Students enrolled in these courses take on the responsibilities of financial analysts from day one. Incorporating much of what they have learned in prior corporate finance courses, capital market courses, and investment courses they are prepared to construct a portfolio from scratch. Besides the typical quantitative lessons such as fundamental analysis, students also address qualitative issues in order to understand the psychology of investing and hence gain a better understanding of investor sentiment. Portfolio management is offered within a seminar setting, allowing students to actively participate in lectures as well a share ideas and analysis techniques.
Technology
The CAFE takes advantage of a variety of technologies within the Mario J. Gabelli School of Business by providing access to real-time data, news and information for companies listed on all of the major exchanges around the world. In order to manage real-money successfully, it must be done in real time. As the CAFE Portfolio Management Program strives to replicate every aspect of industry, it utilizes the same tools as does the financial services industry.
Financial Platforms: Bloomberg
Bloomberg is the industry standard and benchmark for all analytical financial platforms today. The Bloomberg Professional® service (the Terminal) is the most powerful and flexible platform for financial professionals who need real-time data, news and analytics to make smarter, faster, more informed business decisions. As the leading provider of sector, industry and company information, Bloomberg enhances the student fund manager’s ability to incorporate a more thorough top-down analysis, leading to more sound investment decisions. In addition, by gaining the experience on this platform prior to graduation, graduates are more at ease when transitioning into industry
Financial Platforms: Money.Net
Money.Net provides a comprehensive set of customizable market data systems for students acting as fund managers (and traders) to meet total real-time market data and trading needs. The service offers real-time information analysis, decision support, and trading solutions.
An intrinsic feature of the Money.Net service is its analytic ability, helping students understand the markets by means of real-time tools. Money.Net is the lead trading platform when incorporating Technical Analysis Techniques and VWAP into timing trades.
Responsiveness to Current News
Both Bloomberg and Money.Net are imperative tools in helping to regulate the flow of information that enters the Center for Advanced Financial Education. As a result, student managers are able to base their investment decisions on sound principles derived from the research provided through these platforms.
