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MSc Finance: Introduction to International Finance | University of Aberdeen Business School Online

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My experience from actually working with
the professionals and – just to give students some information – I was a
trustee on our University Pension Committee and I was an
Investment Advisor on the University’s investments and I’ve also been the
Chair of a charitable trust where we had to manage funds and then distribute
those funds in such a way that fitted with the investment policy statement
which is something that we have discussed quite a bit I think. The things
that I really learned is that as an academic we spend a lot of time doing
research, understanding data, developing theories and models about asset pricing
and then, while we can go and discuss these things with professionals, it’s
actually the action of doing and being on the committees where you’ll understand
how decisions are made. One of the important things was having a lot of
information in front of you about the performance of the fund, about the aims
of the fund and discussing with the actual investment managers who were
managing the funds on behalf of the investment fund. What you learn is
all the very important information that you need to understand. So that has been
built in to this course. The purpose of this course has been to bring the
academic side of it together with the investment professional world. How do I
think this type of course will contribute to the employability of a
student? Well, one of the things that we have done is that, in addition to
reading and understanding different concepts, we’re going to be actually
working with an Excel sheet where you do proper portfolio optimization. Now, when
you are employed, you are likely to have a much more sophisticated programme
that would help you do portfolio optimization, but by understanding the
actual formulae that are built into an Excel sheet that can contribute to how
we actually reach the balance of a portfolio. You will have a sound and
solid understanding of the fundamentals and that will help you
when you’re in meetings with your employer and lots of other people trying
to explain why it is that you’re making certain investment decisions. Well that’s
a good question as well and that is about why we were actually putting asset
pricing and portfolio management together. We’re also highlighting
them as two subtopics that we brought together under one umbrella and the
investment management industry is a huge industry with trillions of dollars being
traded all of the time and it is very much professionals who are working in
that industry. Asset pricing tends to be more theoretical and many people have
spent a long time developing these kinds of models and we really wanted to bring
the two together so that investment managers, when they are making these
decisions, have a good understanding of the reason why certain prices of assets
are what they are, you know why it is that equities are priced in the way that
they are. When you’ve got that good knowledge of pricing, then you can be a
better professional. That’s a good question as well about the activity – it’s
what type of activities might a student be expecting from doing this course. Much of it is going to be understanding concepts, so taking your time, doing some
research and doing some numerical and quantitative work as well. We very
much wants to have a practical aspect to the course as well. I referred earlier
to an Excel sheet where we do some portfolio optimization and what you’ll
discover with this is that the world is not perfect. You can put data
into these types of sheets and you might want to get the most perfect results
which will tell you exactly how you should balance the portfolio and
you’re going to discover it’s not quite like that. A lot of our asset pricing
models are debatable and choosing the best models to forecast expected returns
has been hotly discussed for a very long period of time and so we’re
hoping to develop your practical skills using the activities. I’m sure
your skills at using Excel are definitely going to be improved from
doing this. We hope that you’ll enjoy that. My research in finance, when I first started doing a PhD, it wasn’t that
long after a stock market crash – I won’t tell you exactly which crash
but it wasn’t that long after it. And I was absolutely fascinated with the
impact of stock market prices, particularly and it might sound a bit
ironic, but particularly on families because when things happen in the stock
market, maybe directly it doesn’t affect a
family, but it does if interest rates start to increase or if consumption
starts to change or if we go into recession. That affects families very
much, so I was interested in the reasons why stock market prices actually
move and as I became more involved with it I became interested in something
called stock market predictability and this is really because the wave price
has changed. It’s actually very, very difficult to forecast what’s going to
happen to stock market prices in the future, but what we have discovered are
that there are some ways that seem to be related to overall risk in the economy
that does tell us something about future of stock market movements. So that’s the research path that I took, but at this current time, I’m actually doing
some research on real estate investment. Real estate, as we know, is an asset class and we’re looking at the the reasons why real estate
investment trusts may be somewhat predictable as well.

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