September 21, 2019
Student Managed Investment Fund
"We have a written document that lays forth a roadmap of strategy and tactics,' Barry fund adviser Stephen Morrell says.
Student Managed Investment Fund
Brian Barrett is one of the faculty directors of the Category 5 Student Managed Investment Fund.
Student Managed Investment Fund
FSU students research investments and make pitches to an advisory committee.
Student Managed Investment Fund
David T. Brown, Faculty director of Gator Student Investment Fund.

Wealth Management

Florida's student-managed investment funds ...

University of Florida
Gainesville

  • Program: Gator Student Investment Fund
  • Faculty director: David T. Brown
  • Year started: 2012
  • Structure: About 45 members per semester are selected to participate. Students are divided into two groups: Risk management and research. The fund is led by two chief investment officers and two presidents. Students in the master of science in finance program can take a project course to improve the fund.
  • Board composition: Six members made up of alumni with experience in managing assets.
  • Fund: $500,000, invested in six sectors of the equities market. The fund will donate $20,000 to support the Florida Opportunity Scholars Program next year.
  • Decisionmaking: Students research and pitch stock in six sectors and present as a sector group to a student-elected CIO, who sizes and writes up trades if they are approved. A board of six directors comprised of faculty, alumni and students provide feedback on investment strategy.
  • How funds are used: The Gator Student Investment Fund makes annual distributions equal to 4% of total assets under management in March of the previous year to both the Machen Florida Opportunity Scholars (3%) and the Warrington College of Business (1%).
  • Perspective: “The students are not enrolled in a course. They recruit members to the fund, train new members and manage the entire investment fund. As a result, participants get hands-on investment experience and hands-on experience in leadership and working in teams,” says Brown.

STUDENT PERSPECTIVE

Patrick Bowling
University of Florida
Chief Investment Officer (2018), Gator Student Investment Fund

When Patrick Bowling graduates with a master’s in finance, he will have the hands-on experience of managing a real portfolio. As chief investment officer, Bowling met with group leaders from each of six sectors, considered their pitches and decided whether to make a trade and how large it would be. “I express my opinion and create discussion.”

Bowling says each sector group in the fund bought two to three new stocks each semester with a goal of outperforming their benchmarks. Collectively, the fund has a goal of outperforming the S&P 500. Its philosophy is to weight its holdings in each sector to reflect the S&P 500’s weightings and include passive holdings to limit tracking error volatility. In 2018, the volatility in the financial markets, particularly in the first and fourth quarters, affected the portfolio’s performance. “It resulted in the underperformance of our fund cumulatively, but our energy sector outperformed its benchmark.”

For 2019, students are paying more attention to portfolio construction. “For many sectors, we are interested in identifying names with compelling investment themes that also act as offsets to current factor exposures such as long and short-term volatility.” Each sector — consumer, energy, financial institutions, health care, industrials and technology — holds two to six stocks.

Bowling plans to work as an analyst for an investment bank in the mergers and acquisitions group in New York when he graduates.

University of Miami
Coral Gables

  • Program: Category 5 Student Managed Investment Fund
  • Faculty directors: Andrea Heuson and Brian Barrett
  • Year started: 2012
  • Structure: About 30 students per semester are selected to join the class and placed into one of seven groups. Chief investment officers are in charge of running the class, executing trades and overseeing sector weightings. Heuson, a finance professor, says her role is to ensure the students’ valuation work is objective and calculations are accurate, remind them to keep a balance across sectors and help them minimize risk when buying a stock.
  • Size of fund: $1.2 million
  • Decisionmaking: Students are divided into seven groups/sectors to research stocks. Each has a sector head. The entire class votes on whether to buy or sell a stock — 51% is needed for approval. When students bought MasTec last semester, they sold another stock in the industrials sector to keep a balance. “It’s hard to get them to make a sale decision,” Heuson says. The students are currently looking to buy a stock in the financial sector, where the fund is underweighted and they see opportunity.
  • Perspective: “Students learn valuation, get strong presentation and persuasive argument skills, gain an understanding of how to look at management and how adding a stock will impact the diversification of portfolio,” Heuson says.
  • Policy: UM’s current policy does not allow students to take short positions or trade options. However, Heuson says, students would like to change the policy to allow for more active management. “The university’s investment committee is thinking about it,” she says.
  • Profits: UM uses 3.5% of the fund’s closing balance to send students to a global asset management education conference in New York City (known as the GAME conference).

STUDENT PERSPECTIVE

Kyle Verduin
University of Miami
Co-Chief Investment Officer, Category 5 Student Managed Investment Fund

Kyle Verduin, a senior at UM, says he discovered investing real money requires a lot more than simply showing interest in a stock. As a member of UM’s student investment group, Verduin learned to do his research, put his findings into a presentation and persuade classmates. “Investing the school’s money makes you take the time to put in 30 to 40 hours of research and run financial models to make sure you are accurate in your view,” he says.

Verduin says he has learned how to find companies undervalued in relation to their peers. He made four pitches to classmates over the last year on stocks such as Everi Holdings, a gaming solutions company, which he considers “a strong value play.” Verduin says he wants to pursue a job in the industry. “Some students treat it as a class, and others, like me, treat it as an occupation.”

Verduin says for 2019, he and his classmates are looking at factors that could affect the markets. The U.S. trade war with China and possible actions by the Federal Reserve “are the two things we are looking at right now. Overall, though, we think it’s a safe environment to be in equities,” he says. As co-chief investment officer, Verduin keeps a close eye on high-performing sectors. “I think there is value to be had in industrials. Also, health care did well last year, and we think it will do well in 2019,” he says. When he graduates, Verduin hopes to get a job at a financial firm and says his involvement with the fund helped him find his future path.

Tags: Economic Backbone, Feature

Digital Access

DIRECT DIGITAL ACCESS
Add digital to your current subscription, purchase a single digital issue, or start a new subscription to Florida Trend.

TABLE OF CONTENTS
An overview of the features and articles in this month's issue of Florida Trend.

ACCESS THIS ISSUE »

Florida Business News

Florida Trend Video Pick

What are microplastics? An expert breaks it down.
What are microplastics? An expert breaks it down.

In the early 2000s, scientists taking samples in open water looking for tiny organisms instead stumbled on something man-made – microplastics. What are microplastics? Lara Milligan, UF/IFAS Extension Pinellas County natural resources agent, breaks it down.

Earlier Videos | Viewpoints@FloridaTrend

Ballot Box

What are your thoughts on the dockless electric scooter boom cropping up across Florida cities?

  • Good alternative for people without a car
  • Cheaper than public transportation
  • Requires more city regulations
  • Eco-friendly alternative
  • They litter city sidewalks and landscapes
  • Battery life questionable
  • Other (Please comment in comment section below)

See Results

Florida Trend Magazine
490 1st Ave S
St Petersburg, FL 33701
727.821.5800

© Copyright 2019 Trend Magazines Inc. All rights reserved.