Investment Philosophy

The investment style of the Babson College Fund (BCF) is to aggressively apply conservative investment principles.

That is, the students conduct intensive fundamental and quantitative research to identify stocks that are good values at their current market prices. Selected stocks are then overweighted within a diversified portfolio. Managers monitor the fund’s overall risk and the sources of risk, aiming to keep risk and tracking error within allowable bounds. Managers budget the allowable risk to the active positions expected to add the most value. The portfolio is entirely equity, comprising nine sectors: Executive, Basic Materials/Energy, Consumer, Healthcare, Utilities/Telecom, Industrials, Technology, Quantitative/Risk Management, and Financials.

“We believe there are opportunities to actively add value and take advantage of temporary mispricings that exist in the market as a result of behavioral factors, size and liquidity constraints and low analyst coverage.

As student managers, we bring an unbiased and fresh perspective to our security analyses. We leverage our diverse personal and professional backgrounds along with Babson College resources to take advantage of market opportunities through in-depth research and fundamental analysis. In order to produce attractive risk-adjusted returns, we adhere to risk controls set forth in our Investment Policy Statement and use state-of-the-art risk management systems and portfolio management tools.”

— Babson College Fund 2007 Portfolio Managers

“We believe there are opportunities for us to generate superior returns by exploiting transient mispricing of securities and equity sectors when taking positions in companies with compelling market positions.”

— Authored and adopted by the 2007–8 BCF managers