History

The DADCO Portfolio was first started in 1999 through the Davidson Student Investment Program sponsored by D.A. Davidson & Company, and was the first portfolio the UOIG was able to manage. Through this program, D.A. Davidson has allowed the UOIG, as well as numerous other western schools, to manage $50,000 each year in a portfolio competition. The portfolio is rebalanced each year on the first of September and any excess profits generated during the previous year are split between the UOIG and D.A. Davidson, creating a strong incentive for the group to perform well. In the past, these funds have been used for educational trips and group operations.

Strategy

The DADCO Portfolio has several differences between both the Tall Firs and Alumni Fund Portfolios. Set up as a competition portfolio, the group typically assumes a greater degree of risk with its equity selections. Companies that are recommended as additions to this portfolio usually have a small-to-mid market capitalization and higher beta. As a result, the UOIG benchmarks its performance within the DADCO Portfolio with that of the Russell 2000 Index. However, given the portfolio’s smaller size and high trading costs, the group typically only holds several equity positions at any given time. As a result, this portfolio is not sufficiently diversified and thus comparison to the benchmark is fairly limited. The market breakdown used within the other two portfolios is also not as relevant. Therefore, instead of focusing on performance metrics such as alpha, Sharpe ratio, active risk, etc., the group measures its success by the competition and school rankings. The UOIG’s objectives are to finish each year with strong relative performance and a high placement within the competition. Profit-sharing with D.A. Davidson is also a group goal.