Students from HEC Montreal business school were awarded the C$25,000 ($19,000) first-place prize in the third annual McGill International Portfolio Challenge, which this year focused on sustainable investment of public pension funds.
Teams competed in the Nov. 8-9 challenge after being tasked with creating a long-term sustainable investment strategy for a fictional fund, called the Newfoundland and Labrador Pension Investment Board, which managed C$15 billion in assets for the province's three largest public pension plans. A major caveat is that the fund has a large stake in the oil and gas sector and is led by a board that is "deeply conflicted on the issue of divestment," said documents detailing the challenge guidelines.
The top three winning teams all developed similar strategies, which "pushed for progressive and partial divestment" from the fund's oil-and-gas industry holdings, said Sebastien Betermier, an associate professor of finance at Montreal-based McGill University's Desautels Faculty of Management who is also faculty director of the contest.
But the first-place team from HEC Montreal proposed the most diversified approach to reinvesting the proceeds of the fund into local green initiatives, Mr. Betermier said.
The first-place team proposed partnering with private equity funds that would give the fictional fund exposure to multiple green initiatives, which proved thoughtful given the fact that teams "do not know what technology will succeed," Mr. Beterminer added.
Finalist judges for the challenge included representatives from the C$409.5 billion Canada Pension Plan Investment Board, Toronto; C$326.7 Caisse de depot et placement du Quebec, Montreal; C$201.4 billion Ontario Teachers' Pension Plan, Toronto; Mercer (Canada) and BlackRock Inc.