Colleges find portfolio managers in classrooms
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Colleges find portfolio managers in classrooms
More schools have students manage real investment accounts
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Updated: 7:14 p.m. MT Nov 16, 2004 • Today in history: July 26
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NEW YORK - A growing number of colleges and facts about this day
universities find they don't have to go far to locate good
investment managers for their endowment funds: Their • Take MSNBC.com's weekly news quiz
students are handling some of the accounts.
At least 185 American colleges and universities have Most Popular
student portfolio managers who invest either portions of
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alumni, said David A. Sauer, a professor of finance at • L.A. seeks info on 50 women in killer’s photos
the University of Dayton in Ohio. That's more than triple • Human hand, skulls found at stripper’s home
the 48 student portfolio programs that existed in 1995, • Boston warned tunnel ceiling wouldn’t hold
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Sauer, who runs Dayton's Davis Center for Portfolio • Boston warned tunnel ceiling wouldn’t hold
Management, said both the universities and the • 2 girls found starving; have well-fed siblings
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"For the students, it's a unique experience," Sauer said.
"There's nothing better than having students apply the
techniques and the tools they learn about in the
http://www.msnbc.msn.com/id/6506516/ (3 of 7)7/26/2006 2:01:12 PMColleges find portfolio managers in classrooms - Education - MSNBC.com
• Lance Bass reveals that he's gay
classroom to a real fund."
• Jury: Yates not guilty by reason of insanity
• Human hand, skulls found at stripper’s home
The payoff for the college or university can be solid
• Boston warned tunnel ceiling wouldn’t hold
earnings on their money. Sauer's portfolio students,
• Assault with a deadly vegetable?
who manage $3.4 million of Dayton's endowment,
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"have beat the Standard & Poor's 500 index by 2
percentage points, on average, per year," Sauer said.
For participating students like Tom Dharte, 22, of Clinton Township, Mich., the
portfolio management center gives him a taste of what working in the financial
world will be like.
"When you walk into the center, there's always a buzz PERSONAL FINANCE
about what's going on in the markets," said Dharte, • Tips for remodeling your
who is majoring in finance and accounting. "It's an kitchen
exciting place to be. It makes you want to learn more • Customers speaking up in
about the markets." funeral homes
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beating the heat
Fellow student Laura Coffey, 21, a finance major
from Centerville, Ohio, agrees.
"It's modeled after a Wall Street trading room," she said. "We're responsible for
more than $3 million, and we take that responsibility very seriously."
In all the portfolio programs, the professors advising the students, and
sometimes university trustees, have veto power over proposed investments.
Most of the earnings are either turned over to the university or reinvested in the
fund for management by succeeding classes.
But the students generally get to pull some of their profits out for things like
class trips to Wall Street or to regional investment houses.
Craig Rennie, an assistant professor of finance with the Sam M. Walton College
of Business at the University of Arkansas in Fayetteville, has students managing
three special trust funds. The largest, created in 1971 by the Raymond
Rebsamen Foundation, started at $100,000. Today it is valued at more than
$1.16 million.
Both sides benefit
Some of the profits are used to fund up to eight scholarships a year for seniors
working as interns at local brokerage and investment firms, he said.
http://www.msnbc.msn.com/id/6506516/ (4 of 7)7/26/2006 2:01:12 PMColleges find portfolio managers in classrooms - Education - MSNBC.com
Rennie said students interested in the portfolio class "have to apply for it, just
like they're applying for a job ... and prove to me that they're eager and that
they can work as part of a team."
The students who are selected to work on the main trust must get approval for
their trades from Rennie and at least two of three faculty trustees. Often large
sums are involved, he added.
"They made about $300,000 in trades in just the past two weeks," Rennie said.
His goal is to have the students run an operation as close as possible to a
professional investment firm.
"We're taking the concepts the students have learned in theory and getting them
to apply them in practice," Rennie said. "They're all things they'll use in careers
as soon as they graduate."
Mary French, 22, of Conway, Ark., has found the portfolio program to be
challenging.
"Doing the research, the nitty-gritty of the“Doing the research, the
number crunching ... and incorporating the nitty-gritty of the number
economics into the numbers, those are thing crunching ... and
you just don't learn from a textbook," said incorporating the
French, who is majoring in finance. economics into the
numbers, those are thing
There's a personal payoff, too, in looking for
you just don't learn from a
jobs, she adds.
textbook.”
"I've been on interviews, and I know that if I — Mary French
Finance student, University of Arkansas
wasn't in the portfolio class, a lot of the
questions they ask would be over my head," she said. "It really gives you
confidence."
Mike Cooper, an associate professor of finance with the Krannert Graduate
School of Management at Purdue University in West Lafayette, Ind., advises a
club of master’s degree candidates who manage a special fund donated by a
Purdue alumnus, businessman Richard Hansen.
"We divide the students into groups to look at different investment alternatives,"
Cooper said. "Sometimes we test strategic theories to see if they play out."
http://www.msnbc.msn.com/id/6506516/ (5 of 7)7/26/2006 2:01:12 PMColleges find portfolio managers in classrooms - Education - MSNBC.com
He said, for example, that the Purdue students have tried to take advantage of
the "January effect," which is a jump in value at the start of the year in stocks
that investors sold off as losers at the end of the previous year.
When one of the student groups is ready to make an investment proposal, it
must make a presentation and persuade colleagues to vote for it. Cooper, like
the faculty advisers of the other programs, always has the final say.
The success can be seen in the portfolio, which is part of the university's
endowment. It has grown from $100,000 to $300,000 in the past four years,
Cooper said. The students, he said, can take a "dividend" each year to
underwrite travel to financial conferences.
© 2006 The Associated Press. All rights reserved. This material may not be
published, broadcast, rewritten or redistributed.
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