[img_inline align=”right” src=”http://padnws01.mcmaster.ca/images/national post.jpg” caption=”Assistant professor Jiaping Qiu and first-year MBA students Simon Yunger, Wenli Zhao, Olufunke Ipaye, Mark Wray and Galini Gavrilidou are participating in the Financial Post’s MBA Portfolio Management Competition. Photo by Julia Thomson.”]

Take five first-year MBA students, $1 million in play money, the stock market and mix. What do you get? The Financial Post's second annual MBA Portfolio Management Competition.

The newspaper has invited MBA students across Canada to build their own mutual fund. In the contest, which runs to the end of March, teams are given $1 million in play money, and asked to build an investment strategy.

DeGroote students Galini Gavrilidou, Olufunke Ipaye, Mark Wray, Simon Yunger and Wenli Zhao, mentored by assistant professor Jiaping Qiu, rose to the challenge.

To kick off the competition, the team loaded up on five blue-chip stocks consisting of three banks and two of Canada's top retailers (Loblaw and Shoppers Drug Mart). They also sunk more than half of their capital into an exchange-traded fund that gives them exposure to the S&P/TSX 60 index.

“We tried to find a balance between finance stocks to get large gains and the TSX, which is resource-based, to get good variance,” explains Yunger.

Adds Wray, “The TSX is well-diversified and relatively low risk.”

And risk is an important part of the challenge. At the end of March, the team with the highest return won't necessarily win. Instead, teams are ranked according to their ability to generate high returns with relatively low day-to-day volatility. The ideal portfolio will provide steady, positive returns.

“This is a great opportunity to learn about trading and better my skills and represent McMaster,” said Olufunke.

Most of the team is new to investing, although Galini Gavrilidou has some experience managing her own portfolio. However, generating a big return, with little risk, over just six months adds an extra layer to the challenge.

And complicating matters is the fact that the team can only shuffle their portfolio at the end of each month.

But the team is off to a good start as they look ahead. Over their first month, they generated a three per cent return.

Keep up to date on the team's performance online at www.nationalpost.com/MBA
or in the National Post, usually on the first Monday of every month.