SHIFT Consortium kicks off the Testing and Validation of the SHIFT model

The Consortium, whose aim is to pioneer an innovative financial model to support Higher Education students in Europe, has started the stress testing of the SHIFT model. After collecting financial data from a variety of sources to assess the resilience of the model under alternative scenarios, the partners identified three Exchange Traded Funds (ETF) for the stress testing.

One for Europe as a whole, one for Poland, and one for the UK. ETFs are passively managed funds and allow portfolio diversification more cheaply than actively managed equity funds, as confirmed by a recent EU publication.

These three ETFs satisfy the data availability requirements for the stress test. Consistent with Socially Responsible Investment (SRI) principles, the fund for the whole Europe allows investing in SRI Eurozone equities. The other two ETFs are chosen to consider the impact of investing in non-Eurozone countries.

Preliminary results suggest that these three ETFs exhibit different characteristics in terms of expected return and systematic risk, which could be exploited to ensure that the composition of the SHIFT fund be consistent with the risk preferences of the potential sponsors.

Once validated through stress-testing methodologies, the SHIFT model and Fund can be used by HEIs as a means to mobilise additional funding to facilitate access to higher education while providing sustainability to public investments.