The purpose of this paper is to look at how the faculty at West Point uses a student-managed investment fund (SMIF) to contribute to the development of Army officers.
The United States Military Academy at West Point started a student-managed investment fund in 1983. The Economics program, which has four finance classes within its curriculum, hosts the student-run SMIF. The students (cadets) in charge of the SMIF have recently started pursuing a risk parity strategy. This paper discusses the challenges that arise from taking on this strategy.
It argues that investment management, especially with a risk-aware strategy, helps the cadets learn to manage the risk/reward tradeoff as well as help them work on leadership skills, both of which will help them as future Army officers.
The authors suggest that the recent student-initiated changes to the SMIF at West Point highlight some of the leadership opportunities inherent to approaching a SMIF from a risk-aware, portfolio-based perspective. This can teach students important experiential lessons about how to manage prudent risk both in finance and as a leader.
Stark, A. and Wisniewski, I. (2019), "West Point: teaching leadership and risk management through investing", Managerial Finance, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/MF-07-2018-0335Download as .RIS
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