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University wealth management programs in Florida

In a classroom at Stetson University, computer screens stream real-time financial data as students in the school’s Roland George Investments Program come and go, tracking the performance of an investment portfolio of stocks and bonds.

It’s no simulation. For 38 years, the private university in DeLand has been entrusting students with a $3.5-million endowment fund, seeded initially with $500,000 by Sarah George in memory of her late husband, Roland. George’s donation made Stetson the first university in Florida and second in the country to establish a student-managed investment fund. It remains among the top-performing student-managed funds in the country, consistently beating benchmarks and winning awards.

Over time, the original donation has been supplemented with $3 million in additional gifts as well as profits generated by the students’ investment decisions. Students in the George program spend a minimum of 20 hours a week tracking market trends, researching investment opportunities and keeping an eye on fluctuations in the portfolio.

“Managing real money allows their spirits to fly,” says K.C. Ma, the Roland and Sarah George Chair of Applied Investments for the Roland George Investments Program. “If the money was virtual or just token, the students wouldn’t feel they have ownership.”

Across Florida, more than a half-dozen other universities have similar student-managed portfolios that are part of the schools’ endowments. At the University of North Florida in Jacksonville, for example, graduate MBA students and undergraduate finance majors manage a $1.1-million portfolio of securities that’s part of UNF’s $100-million endowment.

The UNF students — more than 200 have participated in running the portfolio — spend two semesters studying how to research and evaluate securities and creating reports. The portfolio was launched in 2002 with $500,000. UNF also has a trading room where the young money managers research and track securities on financial data displays and Bloomberg terminals.

“With experience managing a sizable portfolio, students are more marketable when they graduate,” says Reinhold Lamb, professor of finance at the University of North Florida. UNF finance majors have landed jobs at financial services firms in Florida and New York, among other places.

Student-managed investment funds are usually seeded by donations from alumni and businesses. Most have received additional contributions from their universities or donors over time. The funds differ in how they set benchmarks, make buying and selling decisions, create investment philosophies and manage portfolios during the summer months when campuses clear out.

Some funds consist only of equities, while funds like Stetson’s are more diverse. Its portfolio consists of 25 stocks and 15 bonds, each with a value of roughly $100,000. “Stocks are sexy, but students see the value is in bonds,” Ma says.

Stetson students spend the first half of a school year researching and managing stocks and the second semester studying bonds. They make buy and sell recommendations to a seven-member board made up of Ma, the dean of Stetson's school of business administration, a university trustee and four student trustees. During the beginning of each semester, students review holdings and decide whether to sell or keep them. Students learn from their mistakes and enjoy their successes, Ma says.

Stephen Morrell, professor of economics and finance at Barry University in Miami Shores, says his $684,000 student-managed investment fund, which launched in 2012, consists of large, mid- and small-cap stocks as well as government and corporate bonds. Morrell says Barry’s fund is guided by an established investment policy. “We have a written document that lays forth a roadmap of strategy and tactics. It includes what we can look to invest in, what we don’t want to invest in, our policy of socially responsible investing and how often we report our results.”

All of the Florida universities set a benchmark for their student-managed funds. The benchmark for Barry University’s stock holdings is the S&P 500, for example; for cash, the benchmark is the yield on one-year Treasury bills. “We have regularly exceeded investment benchmarks,” Morrell says. “The students are serious stewards of the money they are managing.”

At Florida State University, the student-managed fund uses the FTSE Global All Cap Index as a benchmark for stocks and the Barclays U.S. Aggregate Bond Index for bonds. Its hybrid benchmark portfolio is weighted 80% equities and 20% fixed income. “When we try to beat the benchmark, we overweight equities or underweight equities by country, sector and then by specific stocks,” says Steven Perfect, a finance professional and investments professor at FSU. “However, we have individual stock position limits.”

Along with business school faculty, finance and investment professionals provide feedback to the students — sitting on advisory boards, serving as guest speakers and listening to student pitches. Students say the involvement of these professionals not only provides guidance and oversight, but also gives them access to a network for future careers in financial services.

 

Read more in our April issue.

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