Investing in the Emerging Market at Home

MANY BUSINESS SCHOOLS offer students a chance to work with real money by managing investment portfolios.
Investing in the Emerging Market at Home

MANY BUSINESS SCHOOLS offer students a chance to work with real money by managing investment portfolios. But at Walsh College in Troy, Michigan, the new investment fund arrives with a twist: The entire portfolio will consist of companies headquartered in Michigan.

The US$100,000 investment portfolio was funded by Leon LaBrecque, a CPA, investment manager, and former Walsh faculty member in finance and economics. LaBrecque sees Michigan as an attractive “emerging market” worth investing in. Its current market cap of US$388 billion is larger than Indonesia or Thailand, and its employment rate has been rising at double the rate of the rest of the U.S. At the same time, since early 2009, a portfolio of diverse Michigan companies has experienced returns of 25.2 percent annualized versus 20.93 percent on the S&P 500.

The student-run portfolio, named the Michigan Alpha Project (MAP), not only will give Walsh finance students a chance to gain real-world investment experience, it also will allow the school to support its home-state market. The outcome of the MAP investments—which are focused on Michigan equities—will determine whether regional bias has a positive or negative effect on portfolio alpha. Alpha is a measure of performance on a risk-adjusted basis and is defined as the excess return of the fund relative to the return of the benchmark index.

Two Walsh student teams, each including a portfolio manager and analysts, vie for the opportunity to serve as LaBrecque’s financial advisor, with responsibility for managing his $100,000 portfolio. Teams will be selected based on their responses to a request for proposal and judged according to the quality of their research, validity of their proposed strategies, and other factors. Students will use Walsh College’s finance lab to analyze markets and make investment choices.

LaBrecque sees the new portfolio as a lure to keep students at Walsh—and in state. He says, “I don’t want our young talent leaving home for Chicago or New York. I want them here, where they can be great neighbors and make our state better for generations to come. I want the thousands of great companies in Michigan to have access to the best and brightest.”

For more information about the MAP, visit www.michiganalphaproject.org.