This document outlines the investment policy statement for the James Fund, a student-managed fund at Rensselaer Polytechnic Institute. The fund aims to outperform the Russell 3000 index through investments in exchange-traded products only. The primary benchmark for measuring performance is the Russell 3000 index, to which the fund can allocate between 40-100%. Other permissible asset classes include international equity and bonds. The statement establishes guidelines for eligible securities, strategic asset allocations, rebalancing procedures, and roles of the student managers.

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2015‐2016 Investment Policy Statement

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Table of Contents
1. Purpose/ Overview ............................................................................................................................... 2
2. Investment Objectives ......................................................................................................................... 2
3. Benchmarks / Strategic Allocations ............................................................................................... 3
Domestic Equity ..................................................................................................................................................... 4
International Equity ............................................................................................................................................. 5
Bonds .......................................................................................................................................................................... 5
Special Situations ................................................................................................................................................... 6
Cash ............................................................................................................................................................................. 6
Rebalancing Procedure ....................................................................................................................................... 6
4. Eligible Securities and Strategies .................................................................................................... 7
Domestic Equity ..................................................................................................................................................... 8
International Equity ............................................................................................................................................. 9
Bonds ........................................................................................................................................................................ 10
Special Situations ................................................................................................................................................. 11
5. Procedural Details ............................................................................................................................. 13
Student Manager Roles ...................................................................................................................................... 14
Voting ........................................................................................................................................................................ 14
6. Inactive Management Periods ....................................................................................................... 15
7. Documentation and Communication .......................................................................................... 16
Advisory Board ..................................................................................................................................................... 16
8. Student Manager Biographies ........................................................................................................ 17
Faculty Advisor ..................................................................................................................................................... 20

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1. Purpose/ Overview
The James Fund (the “Fund”) at Rensselaer Polytechnic Institute is a student managed fund
established through an independent studies course offered at the Lally Business School in which its
students are provided the opportunity to expand knowledge they’ve obtained primarily in the
quantitative finance field to gain practical real‐world fund management and security analysis
experience.
The “Fund” is made possible by an initial endowment of $100,000 made by Lally alumnus Dr.
Frank James of James Investment Research, Inc. with the goal for Lally students to attain functional
knowledge of investment strategies and portfolio management by managing and maintaining a fund
that consistently outperforms the Russell 3000 index. The “Fund” is directed by Professor Tom
Shohfi, CFA, Ph.D., who is expected to serve an advisory role to decisions made by student fund
managers.
The “Fund” is managed by an investing committee (“the Committee”) consisting of student fund
managers and the faculty advisor member. Each member of the committee has an equally weighted
vote on all matters pertaining to the “Fund” and all investment decisions and implementation shall
undergo a regularly conducted voting process. The fund is supervised by an Advisory Board
consisting of faculty members of the Lally Business School, RPI alumni, and other local business
leaders.
The purpose of the Investment Policy Statement is to establish a framework for a comprehensive
directive that provides guidance to student fund managers to propose strategies while maintaining
guidelines that must be adhered to when fulfilling these intended strategies. The Investment Policy
Statement shall explicate the investment objective by developing a benchmark target the “Fund” is
measured against and define permissible strategies student fund managers are allowed to
implement.
2. Investment Objectives
There are short‐term and long‐term objective that the “Fund” is trying to achieve. Due to the size
of the fund and nature of the course, the “Fund” is limited by a short time horizon of the acting student

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managers. While the long‐term goal is for the “Fund” to operate in perpetuity so that future student
fund managers can participate in the course and alter the portfolio at a later date, the immediate goal
of the “Fund” is to maximize short‐term returns given appropriate levels of associated risk. It is the
goal of the “Committee” to achieve returns that outperform the benchmark(s) established by this IPS
within the timeframe of the independent study course through identification and selection of
superior investment strategies.
For the long‐term, the “Fund” is to be invested with the objective of sustaining long‐term, real
purchasing power of principle while preserving the original donor’s intent of outperforming the
equity market benchmarked by a broad domestic index (e.g. Russell 3000 or S&P 500).
Risk Tolerance
Given the short time horizon of active management and little to no liquidity needs for
redemptions, the fund can bear slightly more risk than a traditional diversified mutual fund.
However, the CAPM beta (systematic risk) of the portfolio shall not exceed 1.5 times that of the
domestic equity benchmark. If the portfolio beta temporarily exceeds this threshold, the systematic
risk of the portfolio will be reduced in a timeframe consistent with the fund’s rebalancing procedures.
The fund’s use of diversified exchange traded funds (ETFs) reduces idiosyncratic risk of the
portfolio. While many ETFs are not well‐diversified, this IPS document describes position size
limitations in classes of ETFs that contain different levels of diversifiable risk.
The “Committee” will refrain from investing in ETFs that exhibit substantial illiquidity risk.
Illiquidity will be examined on a per security basis and incorporate mandatory analysis of trading
volume, bid‐ask spreads, and price impact models. The student fund managers will also perform
detailed analysis of tracking error risk associated with all proposed ETF strategies.
3. Benchmarks / Strategic Allocations
Due to limits on time horizon and initial capital of the “Fund”, student managers are given an
opportunity to manage a fund that distinguishes itself from the traditional equity portfolios that
nearly all student managed funds implement. With the current developments in the equity market
and taking into consideration of constraints on the “Fund”, the “Committee” has determined that the
portfolio of the James Fund will include exchange trade products (ETPs) only. The universe of ETPs

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is predominantly composed of exchanged traded funds (ETFs). Managing a portfolio consisting of
ETFs gives the student fund managers an inclusive range of investment strategies that cultivates a
practical, flexible investment opportunity universe through which student fund managers can refine
the skills to actualize theoretical investment strategies into real‐world input.
For the purpose of measuring the performance of a portfolio consisting of only ETFs, the “Fund”
will use the Russell 3000 with a default 100 percent allocation as a primary benchmark. The Russell
3000 is a combination of the Russell 2000 (small‐cap) and the Russell 1000 (large‐ and mid‐cap)
indices. The advantage of using the Russell 3000 as benchmark includes that the index is sufficiently
liquid and well diversified. It has an all‐cap exposure and due to recent market conditions it has poor
recent performance. Most importantly, the “Committee” is interested in the index’s inclusion of smart
beta products, which provides an even broader range of factor dimensions that it seeks to enhance
its risk‐adjusted returns.
The fund can generate excess returns through effective allocation to asset classes other than
domestic equity. Additionally, within asset class benchmarks must be established for purposes of
attribution analysis. The asset classes of the fund and associated benchmarks are as follows:
Asset Class Asset Class Allocation Range Asset Class Benchmark
Domestic Equity 40% – 100% Russell 3000 Equity Index
International Equity 0% – 40% MSCI World ACWI ex USA Index
Bonds 0% – 20% Barclays Global Aggregate Index
Special Situations 0% – 20% HFRX Absolute Return Index
Cash 0% – 20% S&P/BG Cantor U.S. Treasury Bill Index
Domestic Equity
The benchmark for domestic equity is the Russell 3000 index, a market‐weighted stock market
index that measures the performance of 3000 listed US companies based on total market
capitalization, which covers all caps and represents nearly 98% of US equity market. It has a long
history and is fully float‐adjusted since its inception. Due to the huge number of components, it is
constructed to be comprehensive with full coverage of the underlying market segment and is well‐
diversified. It is the common benchmark for the performance evaluation of equity investment.
The domestic equity benchmark is the primary point of comparison for the James Fund and,
therefore, the selection of the Russell 3000 has been carefully deliberated. Unlike the S&P 500, the
Russell 3000 has exposure to mid‐ and small‐cap stocks, which if more representative of the entire

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U.S. equity market. While not as diversified as the Wilshire 5000 Total Market Index, the Russell
3000 has a variety of related smart beta indices. Smart beta indices allow component weights to
reflect factors other than firm size (e.g. low volatility, dividend yield, etc.) while still maintaining high
levels of diversification. Therefore, the “Committee” believes that the Russell 3000 index offers the
appropriate combination of market and factor representativeness.
The allocation range for domestic equity is 40% to 100%. The rationale for the most significant
part for domestic equity ETFs in our portfolio is straightforward. Constituents of domestic equity
ETFs are familiar to the “Committee” and their performance are of convenience to trace due to
location in United States. Screening has already been incorporated into the construction of domestic
equity ETFs and thus the investment decision has been simplified. The multiplicity of ETF types
renders us great opportunities to develop and implement strategies. When the equity market is up‐
trending, a maximum of 100% of the portfolio can be allocated into domestic equity ETFs. When the
equity market is in recession or better opportunities are identified in other asset classes, a minimum
of 40% of the portfolio can be allocated to domestic equity.
International Equity
The fund takes the MSCI ACWI ex USA Index as the benchmark for international equity
investment. The index captures large and mid‐cap representation across 22 of 23 Developed Markets
(DM) countries (excluding the US) and 23 Emerging Markets (EM) countries. With 1,859 constituents,
the index covers approximately 85% of the global equity opportunity set outside the US.
The fund may invest up to 40% into international equity ETFs. International stocks represent
an attractive option to diversify the holdings, and international ETFs allow the fund to broadly invest
in the progress and prosperity of other nations. However, investing in non‐U.S. stocks, including those
in developed and emerging markets, can make the fund’s returns more volatile. So compared with
the domestic equity investment, a relatively smaller allocation is permitted to the international
equity markets.
Bonds
Bonds historically provide a low rate of return but they also provide great diversification for
equity portfolio and increase portfolio stability, especially during volatile market periods. Many

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successful multi asset funds hold fixed income securities in their portfolios. Since the James Fund is
principally an equities fund, the fund may only invest up to 20% in bond ETFs.
The benchmark for fixed income allocation is the Barclays Global Aggregate Index, which is a
flagship measure of global investment grade debt from twenty‐four local currency markets. The
index includes treasury, government‐related, corporate and securitized fixed‐rate bonds from both
developed and emerging markets issuers and largely covers four regional aggregate benchmarks: the
US Aggregate, the Pan‐European Aggregate, the Asian‐Pacific Aggregate, and the Canadian Aggregate
Indices.
Special Situations
Special situations are short term strategies designed to increase the performance of the fund.
These can include commodities, currencies, alternative, and inverse ETFs. Detailed descriptions of
these strategies is included in the special situations section of Eligible Securities and Strategies. By
including special situations investing, the fund can generate higher long run returns but can also
incur higher short term risk. Therefore, in order to limit the portfolio’s exposure to this risk, total
allocation to special situations strategies may not exceed 20% of the fund’s value. Additionally, the
“Committee” will fully evaluate before implementation and actively monitor the correlation of any
and all special situations strategies with other components of the fund.
The benchmark for special situations allocation is the HERX Absolute Return Index (HFRXAR),
which is designed to be representative of the overall composition of the hedge fund universe. The
index is comprised of all eligible hedge fund strategies; including convertible arbitrage, distressed
securities, equity hedge, equity market neutral, event driven, macro, merger arbitrage, relative value
arbitrage, etc. As a component of the optimization process, the index selects constituents which
characteristically exhibit lower volatilities and lower correlations to standard directional
benchmarks of equity market and hedge fund industry performance.
Cash
Cash is the most liquid asset and allocation of cash is important due to size of the “Fund” and its
time horizon. Although it is difficult to earn a good return on cash and cash investments such as
money market funds and short‐term treasuries, due to its liquidity, its allocation is an essential part
of any investment portfolio. At the same time, cash investments are generally associated with low

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returns and virtually no credit risk. For our purposes, 20% of the portfolio may be held in cash,
which will be used for tactical allocation when we anticipate the need for immediate reallocation of
capital to a more optimal position. The fund will use the S&P/BG Cantor U.S. Treasury Bill Index as
a benchmark for cash allocation. It is a broad, comprehensive, market‐value index that measures
the performance of the U.S. Treasury Bond Market.
Rebalancing Procedures
Rebalancing procedures will take effect in the event that allocations within the fund exceed
thresholds specified in this Investment Policy Statement. Rebalancing must be completed within
two weeks from the first trading day that the violating imbalance occurs. Additionally, rebalancing
procedures specify that if a portfolio asset declines in excess of five percent relative to the
respective benchmark in its asset class, a mandatory position reevaluation and re‐vote must occur
within 48 hours of the trading day that triggers the decline threshold.
4. Eligible Securities and Strategies
The James Fund is prohibited from engaging in any of the following activities:
1. Purchasing securities using leverage
2. Executing direct short sales
3. Directly purchasing or selling derivative securities for speculation or leverage
4. Engaging in investment strategies that have the potential to amplify or distort the risk of
loss beyond a level that is reasonably expected, given the objectives of their portfolio.
5. Purchasing any ETF with less than $10 million USD of assets under management.
Special situations describes related strategies that are permitted as described in this IPS. For
example, inverse ETF and commodity ETF purchases are permitted. These securities involve
indirect short sales or derivative holdings with limited liability. Details of these securities can be
found under special situations.
The “Fund” will purchase securities using market order, limit order, or stop orders. The choice
of order type will be conditional on the liquidity of the asset to be purchased or sold. All strategies

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must be researched and presented, through the strategy generation role, to the fund managers to be
considered for voting and subsequent inclusion in the portfolio. See Procedural Details for more
information.
Domestic Equity
Asset Class Allocation Range: 40% ‐ 100%
Sub‐Asset Class Maximum Allowable Size
Sub‐Asset Class (Individual Security)
as a Percentage of Total Portfolio
ETF Examples
Well Diversified 100% (100%) SPY,IWV,VTI, DTD, LGLV
Locally Diversified 40% (10%) VFH,VDE,XLK
Specialized 10% (10%) XOP,VGT,KRE
Domestic equity is categorized into three sub‐asset classes according to the extent of
diversification: well‐diversified, locally‐diversified and specialized. The maximum allowable size for
the sub‐asset class above should be 100%, 40%, 10% respectively.
Well‐diversified domestic equity ETFs are defined as ETFs whose constituents cover a wide
range of sectors (Financial services, Technology, Energy, Utilities etc. ) or even the whole 11 sectors
and which have multiple holdings and are aimed at tracking the whole US stock market. The
maximum for this sub‐asset class is 100% since it is directly related to the Russell 3000 primary
benchmark and exhibits risk/return characteristics that are consistent and very highly correlated
with overall domestic stock market returns. Examples of this sub‐asset class are SPY (SPDR S&P
500 ETF), IWV (iShares Russell 3000), VTI (Vanguard Total Stock Market ETF).
Locally‐diversified domestic equity ETFs are defined as ETFs whose constituents mainly
concentrate on a certain sector and which are aimed to track the whole performance of this sector.
Holdings of this kind of ETFs are fewer than that of well‐diversified ETFs and can incur sector
specific risk. The maximum for this sub‐asset class is 30% since it may contain significant
unsystematic risk, particularly for more volatile sectors such as technology. Individual locally‐
diversified ETFs are limited to no more than 10% of overall fund value. Examples of locally‐
diversified ETFs are VFH (Vanguard Financials ETF), VDE (Vanguard Energy ETF), XLK (Technology
Select Sector SPDR ETF).

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Specialized domestic equity ETFs are defined as ETFs whose constituents are mainly from a
sub‐sector in the 11 primary industrial sectors, which describes a much more specific grouping of
companies with highly similar business activities. The maximum for this sub‐asset class is 10%
since it contains even more unsystematic risk than locally‐diversified ETFs because it focuses on
certain industry in the corresponding sector. Examples of this sub‐asset class are XOP (SPDR S&P
Oil & Gas Exploration & Production ETF), VGT (Vanguard Information Technology ETF), and KRE
(SPDR S&P Regional Banking ETF).
International Equity
Asset Class Allocation Range: 0% – 40%
Sub‐Asset Class Maximum Allowable Size
Sub‐Asset Class (Individual Security)
as a Percentage of Total Portfolio
ETF Examples
Well Diversified 40% (40%) VEU,PXF,VWO
Locally Diversified 20% (10%) FEU,EWJ,UAE
Specialized 10% (10%) EUFN,KWEB,INCO
Well diversified international equity ETFs incorporate equity securities from multiple equity
markets outside of the United States. These ETFs also cover broad industry sectors instead of
concentrating on any particular sectors. Well diversified ETFs are broad‐based: for instance, some
of them include stocks in developed economies across Western Europe, plus Japan and Australia
while others reflect a range of emerging economies in Asia and Latin America. According to modern
portfolio theory, well diversified ETFs generally provide less risk as well as a substantial fee‐
adjusted long‐run returns. While these ETFs important role in a diversified portfolio, domestic
market information availability limits due diligence capabilities for many of these foreign markets,
and therefore the maximum allowable size of the well diversified international equity investment is
40% of overall fund value. Examples of ETFs in the category are: FTSE All World Ex US ETF (VEU),
FTSE RAFI Developed Markets ex‐U.S. Portfolio (PXF) and Emerging Markets ETF (VWO).
Locally diversified ETFs focus on broad sectors in a particular country or geographic region of
international markets outside the United States. For instance, some track a single country like the
United Kingdom, Germany, Japan or China. Some focus on a specific region such as Europe or Asia,

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or a combination of countries like the BRIC nations (Brazil, Russia, India and China). The fund may
invest in locally diversified ETFs at allocation no more than 20% among the whole portfolio and no
individual locally diversified ETF may exceed 10%. Examples of ETFs in the category are: SPDR
STOXX Europe 50 ETF(FEU), iShares MSCI Japan ETF(EWJ) and MSCI UAE Capped ETF(UAE).
Specialized ETFs focus on particular industry sectors in international equity markets. By
their very nature, they provide less diversification than the above two kinds of ETFs. The narrower
the focus of an equity ETF, the more likely higher return volatility. As a result, the fund may not
invest more than 10% into specialized international equity ETFs. Examples of ETFs in the category
are: MSCI Europe Financials Sector Index Fund (EUFN), CSI China Internet ETF (KWEB) and India
Consumer ETF (INCO).
Bonds
Asset Class Allocation Range: 0% – 20%
Sub‐Asset Class Maximum Allowable Size
Sub‐Asset Class (Individual Security)
as a Percentage of Total Portfolio
ETF Examples
Diversified Investment Grade 20% (20%) AGG,BND,TLT,SHY,BNDX
Diversified High Yield 10% (10%) HYG,JNK,HYHG
Specialized 10% (10%) NYF,PCY,MBG,HYEM
The bonds asset class is divided into three sub‐asset classes: diversified investment grade,
diversified high yield and specialized. “Diversified Investment Grade” is defined as ETFs that track
an index of debt issued by the U.S. Treasury with different maturities, or ETFs that track an index of
US or international investment grade bonds and cover a wide range of US or/and international
corporate debts with investment grade credit ratings, which are BBB‐ or higher by Standard &
Poor's or Baa3 or higher by Moody's. Since both US treasury and diversified investment grade
bonds have high credit ratings and low risk, the fund will invest up to 20% in this sub‐asset class
and the maximum allowable size for each ETF in the class is 10%. Examples of ETF fall into this
category are: AGG (iShares Core U.S. Aggregate Bond), BND (Vanguard Total Bond Market), BNDX
(Vanguard Total International Bond), TLT (iShares 20+ Year Treasury Bond) and SHY (iShares 1‐3
Year Treasury Bond).

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“Diversified High Yield” includes ETFs that track an index of U.S. high‐yield corporate debt and
cover a wide range of high yield bonds. ETFs in this class should invest in US corporate bonds and
should not concentrate on certain industry sectors or maturities. However, ETFs in this class could
concentrate on certain range of credit ratings as long as it is diversified across sectors. Though well
diversified and have higher expected returns, high yield bonds have lower credit ratings and thus
exhibit higher risk. The maximum allowable size for this sub‐asset class is 10%. Examples of ETFs
fall into this class are HYG (iShares iBoxx High Yield Corporate Bond) and JNK (SPDR Barclays High
Yield Bond).
“Specialized” includes following ETFs: 1) ETFs that concentrate on certain US industry sectors
or geographic regions or maturities, 2) ETFs that track an index of international sovereign debt,
both diversified and regional focused, 3) ETFs that track an index of less diversified and/or non‐
investment grade international corporate bonds. 4) ETFs that track an index of debt‐related
products such as convertible securities, mortgage‐backed securities and preferred securities, 5)
Other smart beta bond ETFs. Specialized bonds ETFs are generally less diversified and may have
exposure to specific debt related financial products. The maximum allowable size for this sub‐asset
class is 10%. Examples of ETFs fall into this category are: NYF (iShares New York AMT‐Free Muni
Bond), PCY (PowerShares Emerging Markets Sovereign Debt), MBG (SPDR Barclays Mortgage
Backed Bond) and HYEM (Market Vectors Emerging Markets High Yield Bond).
Special Situations
Asset Class Allocation Range: 0% – 20%
Sub‐Asset Class Maximum Allowable Size
Sub‐Asset Class (Individual Security)
as a Percentage of Total Portfolio
ETF Examples
Commodities 20% (10%) IAU,DBC,UNG,SGOL
Currencies 20% (10%) UUP,EUO,FXY,FXC
Alternatives 20% (10%) QAI,WDTI,MNA,RLY
Inverse 20% (10%) SH,PSQ,RWM,DOG
Leveraged Prohibited: 0% (0%) SPXL,CEFL,LMLP

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The special situation class has various ETF types: Commodity, Currency, Alternative, Inverse,
and Leveraged ETFs. All of these ETFs are used to pursue special opportunities, may have higher
risk characteristics, and will have specific position size limitations.
Commodity ETFs are defined as ETFs that invest in specific commodities or several different
commodities. Investing in tangible assets like oil and gold can offer diversification benefits and
provide some protection from inflation in a long term portfolio. These funds often replicate changes
in commodity prices through the use of derivatives, including futures contracts. Examples of ETFs
which fit this category are IAU (iShare Gold Trust), DBC (PowerShare DB Commodity Tracking),
UNG (United State Natural Gas), SGOL (ETFS Physical Swiss Gold).
Currency ETFs are defined as ETFs that invest in the currencies of various countries around the
world. The returns of these ETFs are designed to replicate movements in the international market
by shorting a weakening currency or buying a strengthening currency. These funds often replicate
changes in currency values through the use of derivatives, including futures contracts. Examples of
ETFs fit in the category are UUP (DB USD Index Bullish), EUO (UltraShort Euro), FXY
(CurrencyShares Japanese Yen Trust), FXC (CurrencyShares Canadian Dollar Trust).
Alternatives ETFs are defined as ETFs that uses alternative strategies not defined in traditional
asset classes. These ETFs replicate strategies used by alternative asset managers including
long/short, market neutral, absolute return, convertible/merger arbitrage, managed futures, etc.
The performance of this kind of ETF tends to have low correlation to traditional assets but can also
exhibit low liquidity. Examples of ETFs fit in the category are QAI (IQ Hedge Multi‐Strategy Tracker
ETF), WDTI (Managed Futures Strategy Fund), MNA (IQ Merger Arbitrage ETF), RLY (SPDR Multi‐
Asset Real Return ETF).
Inverse ETFs are defined as ETFs that are constructed with various derivatives for the purpose
of profiting from the decline of underlying benchmark. They are also called “Short ETFs” and “Bear
ETFs”, providing investors significant flexibility and profitability potential if they predict that
market index levels will decline. These funds often replicate inverse changes in index levels through
the use of derivatives, including futures contracts. Examples of this kind of ETF are SH (Short
S&P500), PSQ (Short QQQ), RWM (Short Russell2000), DOG (Short Dow30).

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Leverage ETF are defined as ETFs that use financial derivatives and debt to amplify the returns
of an underlying index. The goal of these funds is to replicate a leveraged return (long or short)
relative to a known index with a multiplier such as a 2:1 or 3:1 ratio. These funds often replicate
changes in commodity prices through the use of derivatives, including index options. Examples of
this kind of ETF are SPXL (S&P 500 Bull 3x ETF), CEFL (ETRACS Monthly Pay 2x leveraged Closed‐
End Fund ETN), LMLP (ETRACS Monthly Pay 2xLeveraged Wells Fargo MLP Ex‐Energy ETN).
However, the James Fund is prohibited from investing in these ETPs because of their dramatically
higher volatility profiles.
Note on Indirect Short Sales and Derivatives Use in Special Situations
As described at the beginning of this section, the James Fund is prohibited from direct short
selling, direct investment in derivatives, and using leverage. These strategies are prohibited
because they can theoretically incur infinite losses. However, indirect investment in ETFs that
purchase derivatives or replicate short selling returns are subject to limited liability common in
traditional common stock. Therefore, the loss in a long position in an ETF that replicates short‐
sales or uses derivatives is fixed at the price of the ETF at the time of purchase. For this reason,
certain ETFs that use derivatives and indirect short selling are appropriate for limited use in the
special situations asset class.
Many commodity and currency ETFs (see, for example, Commodity ETFs at Charles Schwab) do
not hold physical commodities but rather choose to own futures contracts due to superior liquidity
and lower transactions costs. Further, indirect investment in commodities via equities can incur
additional risks (see Equity or Direct Exposure: Which is Best? at The Financial Times). High
negative short term return skew offers an opportunity to earn greater excess returns from inverse
ETFs. This is aligned with the short management period of the student managers. Leveraged ETFs,
however, are strictly prohibited for several reasons. First, they incur higher tracking error than
other ETFs that use derivatives to replicate returns. Second, they often change very high expense
ratios. Finally, leveraged ETFs can violate the James Fund stated limitation of beta no higher than
1.5 times the domestic equity benchmark.

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5. Procedural Details
Student Manager Roles
During each weekly committee meeting, student fund managers are expected to fill a role as
part of the team efforts to the “Fund”. There are four primary roles that managers are expected to
fill: Market development, Risk Management, Director of Research, and Strategy Generation.
Deliverables for each role are expected from managers who volunteer or are assigned to their roles.
The overview of expectations for role deliverables is as follows:
1. Market Developments:
● Begins the weekly meeting with a presentation of recap for the week
● Get the Fund team thinking about new ideas, economic trends, and important events
to consider for investment
2. Risk Management:
● Prepare a one to two page document on portfolio holdings, risk levels, and
performance of the “Fund” relative to the benchmark
● The document shall also include attribution analysis and best/worst holdings
● Evaluate portfolio for weaknesses, develop and enhance risk management tools
3. Strategy Generation:
● Produce a one to two page report on a security and/or strategy involving securities
● Present the strategy to the fund members for subsequent voting
4. Director of Research:
● Keep and update records of voting results conducted during the weekly meetings
● Supervise the repository of strategies and keep track of strategy developments
outside of the fund holdings
Voting
Student fund managers are expected to perform these roles and communicate with other
members throughout the week before voting takes place. Each student has one vote. The faculty
advisor member also has a vote along with a veto vote that will only occur when the position of the
“Fund” is risk inappropriate or prohibited by the Investment Policy Statement. Votes may be cast as
“Yes”, “No”, or “Abstain.” Each proposed change in strategy position or asset allocation decision
requires a second vote to initiate the voting process. From there the vote requires 3/5ths majority (7

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out of 11 potential votes) of the class members to uphold. If a classmate has previously stated that
they will be absent from a class involving a voting session, they are allowed to input their vote via
email to the class stating their vote and reason. Absentee ballots must be completed within 12
hours of the original vote to ensure that the strategy is not delayed. In the event that the voting
process takes place outside of class, the voting shall take place over the group’s communication
platform, GroupMe. The vote must be initiated and seconded within the chat before the vote can
begin. All members have 12 hours to input their vote. Failure to do so results in a forfeit of their
vote. In the event of a tie, or a lack of majority, the motion will not pass.
6. Inactive Management Periods
At the retirement date of current student fund managers (i.e. the end of the 2016 spring
semester), the “Fund” will be put into “perpetuity mode”, which is an investment setting
implemented by the student fund managers to sustain the fund in absence of active management.
The “perpetuity mode” will be become inactive when a new class of student fund managers
assumes responsibilities of the fund with the approval of the Advisory Board and Trustees. The
positions making up the Inactive Management Period will be decided by the Student Fund
Managers before the period. If the students feel that the market is bullish, the positions will be
entirely equity, decided by extensive research and implemented if a 3/5th majority is met. If the
future is perceived to be bearish, the funds will limit equity and hold a large cash position, up to
50% of the total amount of the fund. The positions will pass after a majority vote. The goal of the
inactive management period is to ensure that the fund will continue to benefit from the market,
without requiring heavy attention or rebalancing efforts from the managers.
International equity and special situations asset classes will not be permitted during inactive
management. ETF holdings permitted during inactive management asset allocations are as follows:
Asset Class Asset Class Allocation Range Permitted ETF Holdings
Domestic Equity 40% – 100% IWB,IWM,IWV,SPY,VTI
International Equity 0% None
Bonds 0% – 20% AGG,BND,TLT,BNDX
Special Situations 0% None
Cash 0% – 40% Brokerage Money Market

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7. Documentation and Communication
The “Committee” of student fund managers will communicate on a continued basis through the
fund e‐mail list and group chat. A committee meeting (i.e. the regular independent study class time)
will be held weekly. All data will be shared through a secure cloud‐storage service accessible to all
members.
A repository of investing strategies, whether implemented or otherwise, will be maintained by
the Director of Research. Student fund managers are expected to track the strategies they have
proposed and to assist the Risk Manager in conducting weekly analysis of the fund. Investing
strategies deemed exceptional by the James Fund can be contributed to the crowd‐sourced financial
analysis site Seeking Alpha after being approved by the “Fund” with a voting process and half of any
proceeds from Seeking Alpha due to this strategy contribution are disbursed into the “Fund”. The
other half is to be distributed to the student(s) who developed the strategy. The student(s) who
proposes, develops, and presents the strategy must approve any submission to Seeking Alpha and
may veto submission despite a majority vote by the student fund managers. All voting procedures
are documented by the Director of Research. The ongoing record of voting process will be evaluated
at the end of the concurrent term as basis to evaluate performance of student fund managers.
Advisory Board
Periodic reports will be provided to an Advisory Board and the Trustees, which include the
faculty advisor as well as administrative members of Lally and RPI. These reports include startup
documents, such as this IPS document, which will be provided to Dr. James and the initial
presentation of the “Fund”. Should the Advisory Board request additional reports, the “Fund” will
provide these reports within seven working days. During the 2015‐2016 academic year, the QFRA
Advisory Board will function as the James Fund Advisory Board with the expectation that future
student fund managers will report to an independent James Fund Advisory board.

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8. Student Manager Biographies
Yanpei “Claire” Cheng
Yanpei Cheng pursues MS degree in Quantitative Finance and
Risk Analytics at the Lally School of Management in RPI. She
received Bachelor degree in Finance from Zhongnan University
of Economic and Laws. Yanpei Worked as an intern in Hang
Seng bank with data mining and software learning. She also
interned in the Great Wall Security with experience in initial
public offering and data processing. She is the vice president of
IAQF department in Buttonwood Club in Lally School of
Management. Yanpei has great passion in investment research
and risk management. She will put every effort in the James
Fund and feel honored to corporate with other team members.
Xiaochen “Daisy” Deng
Xiaochen completed her bachelor degree major in Accounting
and is a candidate of MS in Quantitative Finance and Risk
Analytics at RPI, scheduled to graduate in May 2016. She is
currently doing a research on Telecommuting in Master
Scholars Research Program with Professor Timothy Golden.
She also interned in Bank of China and Bank of
Communications with experience in data mining, structured
financial products. She has great interests in investing and
portfolio management, and also wants to improve her
analytical ability. She can apply her accounting knowledge on
the fundamental analysis and will try her best to contribute to
James Fund.
Pat Haughey
Pat has been at RPI as an undergraduate and as a graduate
student. His undergraduate disciplines included Mathematics
and Economics. For his graduate work, Pat is currently
studying Quantitative Finance and Risk Analytics. Capping off
his undergraduate work in mathematics, Pat is a member in the
national mathematics honor society, Pi Mu Epsilon.
Since last year, Pat has been working for a long/short hedge
fund in Albany with assets under management of around a
billion dollars. Currently, Pat has been studying the industrial
sector through fundamental analysis. Pat intends to bring more
fundamental analysis to the fund, a strong understanding of US
macroeconomics, and professional experience in the
investment field.

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Vivek Marthi
Vivek is currently pursuing his Masters in Quantitative Finance
and Risk Analytics at the Lally School of Management of RPI. He
received his Bachelors in Bioinformatics and Molecular Biology
from the same and is working to ensure that the James Fund
will benefit from a different perspective that his undergraduate
degree will provide the team. Vivek is extremely excited to be a
part of this unique experience and is eager to learn as much as
possible.
Vivek founded the RPI Club Soccer team while in college, is
associated with Sigma Alpha Epsilon fraternity and is
scheduled to take the CFA Level 1 exam in June 2016.
Majeed Simaan
Majeed is a third year PhD Finance candidate at the Lally
School of Management at RPI. His research interests cover
optimal asset allocation and liquidity risk management.
Moreover, Majeed studies financial networks using statistical
learning and textual analysis tools. He holds both B.A. and M.A.
in Statistics from the University of Haifa, with specialization in
Actuarial science. Before joining RPI, he pursued graduate
training in Economics, Statistics, and Finance from Tel Aviv
University and the London School of Economics. Majeed is both
fascinated by academic and applied research and is happy to be
a part of the student managed fund.
Ellen Tomjanovic
Ellen Tomljanovic completed her degree in Biomedical
Engineering from RPI and is scheduled to receive her MS in
Quantitative Finance and Risk Analytics from Lally in May
2016. Ellen intends to use both degrees to provide the James
Fund with an appropriate risk and return culture, analytic
insight and appropriate long term goals. She is excited to be an
active contributor to the fund management and its advisors.
Ellen will start her professional career at Deloitte Consulting
this summer. In her free time, Ellen coaches the RPI swim team
and is studying for the Financial Risk Manager’s certification.

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Xueqi “Kay” Wang
Xueqi Wang is a MS in Quantitative Finance & Risk Analytics,
CFA level 2 candidate with experience as a risk management
intern. She completed a B.S. in Economics degree (major in
finance) from Shandong University in China. Extensive
experience working as the team leader in the nationwide
Entrepreneurship Competition, measured the risks of finance
and operation of a start‐up project. Working as the team leader
in the International Association Quantitative Finance (IAQF)
competition, holding passion for data analysis, model
construction and risk management. Xueqi is always eager to
learn and will contribute to the James Fund with full effort.
Daoyi Wu
Daoyi Wu is a MS in Quantitative Finance and Risk Analytics
candidate at the Lally School of Management at RPI. Daoyi
completed his B.S. in economics (Finance concentration) from
Shanghai University of International Business and Economics.
Daoyi has an internship at a leading Chinese futures broker
company as a macro analyst. He also has two years of both
part‐time and full‐time day trading experience. He intends to
combine his knowledge in economics and quantitative research
skills to provide the James Fund with better investment
opportunities and risk management.
Nick Xing
Nick Xing is a current M.S. candidate in Quantitative Finance
and Risk Analytics major at RPI. He majored in Finance at the
University of International Business and Economics in Beijing,
China. Nick has worked in a wide range of job function in
business intends to use his international background in finance
to assist the James Fund in developing investing strategies.

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Minghan “Kevin” Zhu
Minghan is a Master Candidate of Quantitative Finance and
Risk Analytics in Lally and plans to graduate in December
2016. Minghan comes from China and earn B.A. in Economics
with major in Finance and minor in Mathematics in Soochow
University. Minghan loves studying knowledge in portfolio
management and quant trading and applying them into real
life. He wants to further improve his problem solving ability.
Minghan also contributed as a student portfolio manager in the
RPI team for Chicago Quantitative Alliance Investment
Challenge. He feels honored to contribute in James Fund, and
will try his best to provide the Fund with reasonable strategies
and management insight.
Faculty Advisor
Tom Shohfi, CFA, Ph.D.
Tom served as an assistant adjunct professor for the
undergraduate Applied Investment Management class at the
University of North Carolina at Chapel Hill’s Kenan‐Flagler
Business School. He was also a member of the board of advisors
for UNC Chapel Hill's BSBA and MBA Applied Investment
Management funds
Mr. Shohfi was a Dean's scholar at New York University and
earned a BA in computer science and mathematics from that
institution. He also received his MBA from Kenan‐Flagler
Business School at the University of North Carolina at Chapel
Hill and holds the Chartered Financial Analyst designation. He
was awarded a doctorate in financial economics from the
University of Pittsburgh. Tom’s research interests include
corporate credit markets and financial analyst behavior.
Professor Shohfi, in addition to academic events, has presented
his work at Citadel Global Equities, Blackrock Scientific Active
Equities, T. Rowe Price, and Wharton Research Data Services.