UC Berkeley Haas School of Business Fisher Investments

UGBA 137 Case Study # 2 – Steve Rogers' US Portfolio

Your long lost uncle, Steve Rogers, recently fired his investment manager. A spry 70 years old, he isn't quite ready to retire, but wants to start thinking about how to manage his assets to best meet his long-term goals and objectives. He says the money isn't just for him; he also wants it to last for his long-time business associate, Bucky Barnes, who is 40.

Uncle Steve fired his last investment manager because the portfolio's ups and downs were just too volatile for him (relative to the S&P 500 especially), and it consistently underperformed. However, he doesn't use a particular benchmark to measure his portfolio performance against. He just reviews how the portfolio has performed against the best performing countries and sectors across the world every year. And he wants positive returns from his stocks every year.

A patriot at heart, Steve insists on investing mostly in the United States, specifically the 10 largest companies in the market. But, Steve now admits his investing strategy hasn't netted him the results he's wanted. He's open to hear your ideas to change things. He just can't figure out how best to capture that in his portfolio. In particular, he likes what he sees in Emerging Markets, but he's leery of investing directly in Emerging Markets companies. He also doesn't like what's going on in Europe right now and is thankful he doesn't have any portfolio exposure there.

Questions

  1. What's wrong with Uncle Steve's strategy?
  2. How would you explain why his portfolio seems to be more volatile than the broad US market?
  3. Emerging Markets interest Steve, but he doesn't like buying stocks there. How might he get exposure to fast-growing emerging markets performance, without actually investing in emerging markets stocks?
  4. What might be a better benchmarking strategy for Steve?