They show up ten minutes early to investment meetings, manage million-dollar funds, check stock returns in their free time and at the end of the day… finish their homework?
Allowing college students to manage a $1.2 million fund may seem surprising, but for participants in the College of Business Student Investment Fund, this experience sets them apart from their competitors in a shrinking job market.
The Student Investment Fund was established in 2007 thanks to generous donors who recognized the importance of giving students the skills needed to be successful in the highly competitive finance world. Private donations make up 100 percent of the fund.
“I feel privileged that alumni are confident in our ability to invest wisely,” graduate student Kelsey Syvrud said. “Working with the Student Investment Fund is one of the most rewarding experiences about the college’s program, and without these donations, we could not learn at the depth we are able to.”
Timothy Sackmaster, another graduate student in the program, said he and his peers are especially proud of the fund because it is a collection of gifts from alumni and friends—and they take managing it very seriously.
“The Student Investment Fund is treated as if it were an actual professional long/short fund, meaning investments must be researched meticulously in order to make informed decisions. We conduct ourselves at the highest standards possible by creating diverse investments that limit risk while still aiming to beat benchmark returns,” Sackmaster said. “It is a great honor to be a part of a university where former students are so supportive of current students.”
It is clear that the Student Investment Fund is much more than a graduation requirement to the students who manage it. The class is divided into groups specializing in one of three popular investment strategies: long-term investing; short-term investing; and macroeconomics. The long- and short-term groups focus on specific aspects of investing and pitch stock ideas to the class, and the macroeconomic group is in charge of updating the class on portfolio allocation and any economic factors that may impact portfolio decisions.
Students in the nine-month class are responsible for creating stock pitches and convincing their classmates and professor to invest in the ideas. Student votes determine whether the idea is added to the portfolio with oversight from Dr. James Doran, the Gene Taylor/Bank of America Professor of Finance and director of the Student Investment Fund.
“The only way to truly appreciate the complexities and emotions of financial markets is to deal with real money,” Doran said. “It is impossible to simulate the experience because when there is nothing at stake, managers have no risk and thus the choices can be made with no downside aversion. From this experience they can refine their skill set which will ultimately achieve their goals of entering the money management industry with a tremendous tool set and knowledge.
To students, Doran’s straightforward teaching style is one of the best aspects of being involved in the program.
“Dr. Doran treats the students as if we are employees, expecting our very best professional efforts when a pitch is made,” Syvrud said. “If something isn’t up to his standards, you can assume it wouldn’t be up to potential employers’ standards. This approach benefits students because it prepares us for future interviews and jobs.”
For the next few months, students hope to see the fund continue its rally from the summer 2010. As of mid-November 2010, the young fund holds most of its $778,219 asset value in cash, which the students look forward to investing and profiting from in a volatile market.
Long term, both Syvrud, who plans to earn a doctorate in finance, and Sackmaster, who wants to become a financial analyst, say their experience with the Student Investment Fund is an asset that has shown them the importance of giving back.
“This class shows the importance of philanthropy and how gifts can enhance programs for students,” Syvrud said. “I think it’s an essential component to the college and would be happy to give back to a source that gave so much to me.”
Through his involvement with the Student Investment Fund, Sackmaster sees how gifts of all sizes are vital to FSU students. In October 2010, he began a legacy of philanthropy with his first gift to the College of Business.
“A couple of years ago the idea of the Student Investment Fund even existing seemed out of reach, and now it is a fund working to benefit students.” he said. “I plan to continue to donate every year because I know the funds create opportunities like the ones I receive today for future students.”
Doran says he would like to see gifts to the fund grow to more than $10 million in order to give Florida State’s program the support it needs to continue moving forward.
“My hope is to make this the foremost student managed fund in the country,” Doran said. “This will come with greater asset under management so students can implement a variety of different strategies and techniques, which will teach them how to adapt to differing market conditions. Our students are just as good as students graduating from Harvard and Wharton,” Doran said, “and this class prepares them to seize the top opportunities on Wall Street. Gifts to the Student Investment Fund help our students see themselves for their excellent potential.”
Thanks to the Student Investment Fund, the College of Business is able to positively impact the market leaders of the future today.
“The fund has been a valuable opportunity for me because investing is a dynamic process that just can’t be taught by a book. Just like any investment professional, I have to continually monitor my recommendations and the economic environment they exist in,” Sackmaster said. “I am confident the fund has allowed me to develop the skills necessary to quickly adapt to any company I join after graduation.”