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11 – 20 of over 18000The James Fund at Rensselaer Polytechnic Institute’s Lally School of Management is a small, recently established, course-driven student-managed investment fund (SMIF). The purpose…
Abstract
Purpose
The James Fund at Rensselaer Polytechnic Institute’s Lally School of Management is a small, recently established, course-driven student-managed investment fund (SMIF). The purpose of this paper is to provide insight to new and existing funds in improving individual fund operation and structure.
Design/methodology/approach
The James Fund seeks to outperform an 80/20 equity/fixed income benchmark by investing exclusively in exchange traded funds and to move primary emphasis away from idiosyncratic risk and individual equity valuation back toward asset allocation, the most significant driver of portfolio performance. Buy and sell decisions must receive a three-fifths majority in voting among students and adhere with the investment policy statement.
Findings
Groupthink, a common problem in student-managed funds, is observed in trade proposal and manager voting patterns.
Originality/value
Groupthink is partially addressed through the use of instructor feedback on individual student trade diaries. Student managers transition each semester; therefore, the portfolio must meet dormant period criteria limited to a specific list of broadly diversified ETFs, mitigating potential problems from knowledge transfer between management teams that are largely unexamined in the context of SMIFs.
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The purpose of this paper is to describe an investment program that offers students with the opportunity to simultaneously manage a private asset fund and a public asset fund. The…
Abstract
Purpose
The purpose of this paper is to describe an investment program that offers students with the opportunity to simultaneously manage a private asset fund and a public asset fund. The program has been in operation since 2013 and has made significant progress in student placement and connectivity with local, regional and national financial firms.
Design/methodology/approach
The authors describe the structure, methods used and challenges encountered in this dual portfolio environment and add relevant thoughts for discussion. The authors discuss potential conflicts of interests that may arise in managing a private equity portfolio, the concern of proper deal flow, the issue of the investment timeline when investing in private equity and the problems encountered when measuring private equity performance.
Findings
While public asset funds have been around for decades and are relatively well accepted throughout all levels and types of higher education institutions. The uses of private equity funds, though not unheard of, are much less prevalent. Allowing the same group of students to manage both type of portfolios is relatively unique and provides with a more comprehensive learning experience.
Originality/value
A primary distinguishing attribute of this program is that accepted students are given the opportunity to simultaneously manage both public and private equity assets throughout an academic year. The goal is to create a comprehensive portfolio management program that replicates a changing investment management environment where private equity is an increasingly significant asset class.
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Jared H. Bowers and Angeline M. Lavin
The purpose of this paper is to develop and test a model that can be used to help students learn the investment analysis process and accurately identify good and bad investment…
Abstract
Purpose
The purpose of this paper is to develop and test a model that can be used to help students learn the investment analysis process and accurately identify good and bad investment opportunities.
Design/methodology/approach
The model tested in this research was developed by a former member of the student managed investment fund Coyote Capital Management at the University of South Dakota. The goal of this project was to refine that original model and test it using historical data from a sample of companies during both bull and bear market periods.
Findings
During the bull market period (2004‐2006), 81 per cent of the model's recommendations were correct, and during the 2007‐2009 bear market period, approximately 66 per cent of the model's recommends were correct.
Originality/value
While following the model's recommendations could potentially produce returns well above those of the market in the best case scenario and returns in line with the market in the worst case scenario, there are many factors that should go into making an investment decision. This model can be useful as an item in the investor's tool kit, and it has the potential to help students better understand the process of evaluating an investment opportunity.
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Geeta Lakshmi, Hao Quach and Siobhan Goggin
Finance courses are major offerings in UK business schools, at various levels. Seldom do these courses move beyond theoretical modeling and textbook approaches. This is…
Abstract
Finance courses are major offerings in UK business schools, at various levels. Seldom do these courses move beyond theoretical modeling and textbook approaches. This is corroborated by the paltry literature on challenge-based learning (CBL) in the finance arena.
In this chapter, we describe the experience of implementing an investment fund designed by experienced members of staff and set up and run by students in one of the UK business schools in 2018. The seed capital of the Fund was donated by a variety of sources and has enabled students to use this as a jump start for their investment skills. The ethos of the Fund is not to teach students just how to invest but to put students in a real-life investment setting where they deal with the running of day-to-day activities of managing investments through a practical framework. In doing so they discover, adapt, and apply theoretical models to funds while preparing performance reports. Students have been successful in getting jobs by demonstrating their involvement, and the Fund has put them in touch with investment banks and future employers. The functioning of the Fund is analyzed in this chapter.
The chapter suggests the practical steps involved in setting up such a schema of CBL, which might aid other higher education institutions and promote entrepreneurial, creative, and team building activity.
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J. Christopher Hughen and Peter P. Lung
Student-managed investment funds typically pursue “plain vanilla” objectives. The purpose of this paper is to demonstrate the value of adding option strategies to reduce the risk…
Abstract
Purpose
Student-managed investment funds typically pursue “plain vanilla” objectives. The purpose of this paper is to demonstrate the value of adding option strategies to reduce the risk of equity positions around earnings announcements. The collar strategy is one such technique with the advantages of a low net cost and limited potential losses.
Design/methodology/approach
The authors provide recommendations for utilizing the collar strategy around earnings announcements. The authors also discuss how the value of this strategy is related to the literature on option pricing and earnings announcement returns.
Findings
Risk management strategies can enhance the pedagogical value of student-managed investment funds. The authors document how students have successfully utilized the collar strategy to immunize risk.
Originality/value
The collar strategy can enhance the pedagogical value of student-managed investment classes in several ways. First, students learn how to implement risk reduction strategies. Second, the proper implementation of these strategies requires students to learn the complex mechanisms associated with corporate earnings dissemination and analyst coverage. This also provides an opportunity to study earnings drift, which is a persistent and economically significant financial anomaly.
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In 2004, Roanoke College began offering a Student-Managed Fund course, wherein students were able to manage a portfolio of equity and fixed income using real money. While not a…
Abstract
Purpose
In 2004, Roanoke College began offering a Student-Managed Fund course, wherein students were able to manage a portfolio of equity and fixed income using real money. While not a widely adopted concept at the time, it has since become quite common in finance programs, either through courses or clubs. In February 2019, the author supplemented activities in the course with the addition of real cryptoassets for students to manage. The paper discusses the design, implementation, and pedagogical advantages of the fund.
Design/methodology/approach
The paper expands on the existing literature regarding student-managed investment funds (SMIFs or SMFs) by presenting a case study on the implementation of a student-managed cryptoasset fund at Roanoke College.
Findings
The value of experiential learning through student-managed funds (SMFs) is well established. Thus, these programs have become much more common in recent years and are now often expanding to securities beyond equities and bonds. The introduction of cryptoassets to be traded by students at Roanoke College is another step in improving students' exposure to various markets and appears to further improve research and critical thinking skills.
Originality/value
This is certainly one of the first, and to the author's knowledge may be the only, real money cryptoasset fund managed by students.
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Samar Ashour, Craig G. Rennie and Sergio Santamaria
The purpose of this paper is to describe lessons learned from integrating student-managed investment funds (SMIFs) in finance education systems based on the case of the Raymond…
Abstract
Purpose
The purpose of this paper is to describe lessons learned from integrating student-managed investment funds (SMIFs) in finance education systems based on the case of the Raymond Rebsamen Investment Fund at the Sam M. Walton College of Business, University of Arkansas.
Design/methodology/approach
The paper has three main parts. First, it describes how the Rebsamen Fund operates as an integral part of undergraduate and graduate finance education at the Walton College. Second, it explains how the Fund spawned creation of sister funds, an institute, a 62-seat trading center, and coordinates with other agencies and stakeholders. Third, it lists strengths, weaknesses, opportunities and threats facing future SMIF integration into finance education.
Findings
The use of innovative experiential learning solutions like SMIFs bridging theory and practice can be enhanced by integrating them into effective systems of finance education.
Practical implications
Lessons learned include benefits of SMIF management by class, licensing and professional certification, trading centers, use of SMIF finances to support other components of education, proliferation of SMIFs, SMIF stimulation of academic units like centers/institutes, SMIF facilitation of collaboration, importance of tying SMIFs to student finance clubs, coordination of industry speaker visits between SMIF classes and clubs, and use of SMIFs in addressing cutting-edge challenges.
Originality/value
This paper discusses how SMIFs can be integrated in finance education.
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Peter A. Ammermann, L.R. Runyon and Reuben Conceicao
The purpose of this study is to develop an investment strategy designed both to enable student‐managed investment fund (SMIF) students to more quickly build out their portfolio at…
Abstract
Purpose
The purpose of this study is to develop an investment strategy designed both to enable student‐managed investment fund (SMIF) students to more quickly build out their portfolio at the beginning of the academic year and to give them some exposure to quantitative approaches to investment management.
Design/methodology/approach
This study uses data and software that would be readily available to typical SMIF students to develop both an asset‐allocation model and a security‐selection model that can be described as a long‐flat (or synthetic protective put) equity strategy with a momentum‐based style‐rotation overlay.
Findings
Over the time period since the requisite style‐based ETFs began trading, the composite strategy would have outperformed the S&P 500 index during both market downturns and market upturns, providing better than market returns at lower than market levels of risk.
Originality/value
The key innovation of this paper is the development of a quantitative investment strategy tailored specifically to meet both the educational and the portfolio management needs of SMIF students; a secondary innovation is the demonstration of the efficacy of a style‐rotation strategy, in contrast to the more typical sector/industry‐rotation type of strategy.
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The purpose of this paper is to describe how a student-managed investment fund (SMIF) moved from an idea to an operational program over the period of a year at Memorial University…
Abstract
Purpose
The purpose of this paper is to describe how a student-managed investment fund (SMIF) moved from an idea to an operational program over the period of a year at Memorial University in Newfoundland, Canada. The aim is to provide insight to other institutions on how to build capacity when developing their own SMIF.
Design/methodology/approach
I summarize the choices made with respect to funding source, governance structure, faculty involvement, recruitment, investment activities and integration into curriculum.
Findings
Underlying these choices were challenges pertaining to capacity, student competencies, the existing finance program and ties to industry. Through the development of the SMIF, efforts ensured that capacity was suitably developed in each of these areas.
Research limitations/implications
This paper provides insight to other institutions on how to build capacity while developing their own SMIF.
Practical implications
This account provides the field with a unique perspective. It is written following a year spent developing a SMIF that is about to launch.
Originality/value
This account provides the field with a unique perspective. It is written by a new faculty member following a year spent developing a SMIF that is about to launch.
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Peter Ammermann, Pia Gupta and Yulong Ma
The student-managed investment fund (SMIF) program at California State University, Long Beach (CSULB), was launched in 1995 with one portfolio worth $50,000. In the two decades…
Abstract
Purpose
The student-managed investment fund (SMIF) program at California State University, Long Beach (CSULB), was launched in 1995 with one portfolio worth $50,000. In the two decades since then, the program has grown to include three portfolios with a combined value of more than $700,000, managed on behalf of three different clients. The purpose of this paper is to describe the creation, evolution and growth of the program including the development of the new quantitative approach and its subsequent implementation. The paper also discusses the ongoing organizational, educational and investment-management challenges associated with the program.
Design/methodology/approach
The paper includes a description of the development and evolution of the program along with a discussion of the investment results for one of its three portfolios.
Findings
The paper finds: the new quantitative approach implemented in the program is effective as insurance against “black swan” events; and SMIF-type programs can provide learning experiences both for students and faculty members.
Practical implications
The paper explains the practical application of the new quantitative approach as well as the educational benefits of a SMIF-type program.
Originality/value
The paper provides insight into the structure of CSULB’s SMIF program and discusses a unique quantitative approach to asset allocation and security selection.
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