1 A round in IMAG

1.1 The firm, the funds, the clients

You are a fund manager at Asterion Capital, an asset manager whose founders are stepping back. The firm runs one fund per client type, up to four in total: Conservative, Conservative (ESG), Dynamic and Dynamic (ESG). Each fund has its own clients, its own benchmark and its own fees. The client card on the game’s Clients page tells you the home market, the client’s rules and guidance bands, and the current fee of each fund. You can change the fees every round; the client, the fund type and the client type stay fixed.

Asterion measures everything in US dollars. Assets in other currencies are held unhedged, and the game offers no way to hedge them. The resulting currency risk is part of the risk you manage. The fund’s currency cannot be changed.

The investable universe is 180 assets in four asset classes (government bonds, corporate bonds, equities, alternatives) and five currencies (USD, GBP, EUR, CHF, JPY). Alternatives exist in USD only. A market segment is one asset class in one currency, e.g. “EUR / Corporate bonds”.

Together with the money market, one position per currency, this gives 21 positions in each portfolio (money market, government bonds, corporate bonds and equities in each of the five currencies, plus commodities). The strategic benchmark, the strategic asset allocation (SAA), is defined on the 16 positions without the money market. The optimal portfolio holds no cash: cash is a tactical decision of the player, not a strategic position.

1.2 What the game measures

Three things drive assets under management (AuM), the money a fund manages:

Risk-adjusted performance against the benchmark. The benchmark of each fund is its strategic allocation. The game’s Analyst page attributes your return against it (currency, asset class, industry, maturity, factors) and compares your strategic allocation with the optimal allocation held in the game’s parameters.
Client satisfaction. Surveys ask whether the fund is managed the way the client expects: inside the limits, with the right amount of risk, with the required sustainability. A fund held far from what the client expects loses clients at once.
Fees. Higher fees turn clients away but raise revenue; clients tolerate fees better when their risk-adjusted return is good. Dynamic clients respond to marketing and accept higher fees; conservative clients want them low and transparent.

AuM drives the firm’s profit, because each fund earns its fee on its AuM. The goal of every fund manager is therefore to grow AuM: deliver good risk-adjusted performance against the benchmark, keep the clients satisfied, and charge appropriate fees.

The instructor picks the winning criterion (Sharpe ratio, alpha, information ratio, cumulative shareholder return of the firm). Whatever it is, it runs through the same three channels.

1.3 The decision flow

The game suggests an order, and this book follows it. Each step is one chapter.

Step	Page in the game	What you decide	Tool	Chapter
1	Clients	Read the client: the rules, the risk aversion bracket, the limits	Client card, this book	2
2	Course dataset	Read the market: statistics and correlations of the benchmark positions	App, station 1	3
3	Investment strategy → Strategic allocation	The strategic allocation of each fund, its benchmark for the whole game	App, station 2	4
4	Economic outlook, Analyst	Turn the outlook into views on expected returns	App, station 3	5
5	Investment strategy → Tactical allocation	The tactical allocation for this round	App, station 4	6
6	Investment strategy → Automation preferences, Markets	How tactical weights become positions; the ESG floor; asset-level decisions	Game	7
7	Clients → Fees, Projections, Decision checklist	Fees, check projections, submit as team	Game	8
8	Results, Analyst	Read performance, attribution, satisfaction; feed it back	Game	9

Steps 1 to 3 are done once, in the first round, and the result stays for the whole game: the client does not change and the strategic allocation is the benchmark. Steps 4 to 8 repeat every round.

The allocation app

The course provides a Shiny app (https://inno.uni.li/apps/invest/) with four stations that mirror steps 2 to 5. It runs on the course dataset: the full history of the 21 positions, monthly, in dollars, with the money market left out of the benchmark by default. Appendix A is its reference. The app does not talk to the game; you read numbers off the app and type them into the game.

1.4 Rounds, practice rounds, teams

A round is typically one quarter. The instructor may run up to three practice rounds before round 1. In a practice round you make decisions and see the results, but nothing carries over; the point is to learn the platform. After the practice rounds the market resets, and round 1 starts from the decisions of the first practice round. Nothing else carries over.

Each team member has a Student Decision Area; the round is scored on the Team Decision Area. Work in your own area, then Copy as team’s decisions; a copy overwrites the team area without backup. Appoint a round CEO who submits, and rotate the role.

Between rounds the game moves your holdings with the market and with fund flows, and, if automation is on, rebalances them to your tactical weights (Chapter 7). The strategic allocation is not touched by this; it is a benchmark, not a holding.

1.5 The round on one page

Round 1 only: read the client (Ch. 2), read the market (Ch. 3), set and fix the strategic allocation of every fund (Ch. 4), enter it on the Investment strategy page.
Set the ESG floor for the ESG funds in Automation preferences (Ch. 7).
Read the Economic outlook; write down your views with a confidence (Ch. 5).
Run the tactical station for every fund; enter the tactical allocation; check the projected tracking error and information ratio (Ch. 6).
Decide whether to touch asset-level positions; usually not in the first rounds (Ch. 7).
Set fees; read Projections; copy to the team area before the deadline (Ch. 8).
After the deadline: Results and Analyst; revise your γ estimate and your views (Ch. 9).