(June 7, 2011)
Contact: Rick DelaHaya, Centenary News Services, 318.869.5073
Student Managed Investment Fund outperforms benchmark with 17.8% return
SHREVEPORT, La. (Centenary News Service) — Understanding the nature of the stock market, including its ups and downs, and how to wisely invest can be tricky for the most seasoned investor. But for students at Centenary College, the market doesn’t have to be confusing thanks to a program that allows business majors the opportunity to manage and administer an investment portfolio.
Students that took part in the Student Managed Investment Fund are: Front row left to right: Ryan Sparks, Catie Depew, Lyndsay Bertrand, Tara Sandoval, Austyn Pilgrim, Brady Thompson Second row left to right: McCord Coleman, Rob Moffatt, Zac Farrar, Madalyn Allen
Beginning in 2004, the Frost School of Business at Centenary College joined a growing number of business schools by providing students the opportunity to invest real dollars each semester as managers of the Frost School of Business’ Student Managed Investment Fund (SMIF).
This year, after conducting research and analysis, stock and mutual fund selection, along with formal presentations to the Investment Advisory Board, the hard work paid off with a 17.8% return for 2010. What is more impressive is that since its inception, the return has been an incredible 37.01%.
"This really is a prime example of taking learning into action," said Dr. Barbara Davis, Professor of Accounting and Finance and advisor for the fund. "The students are getting real-world experience. This is not a simulation, nor are they using play money. The students make the decisions and see the returns, whether there are losses or gains."
The SMIF became an integral part of the finance program at Centenary in 2004 with a gift of $100,000 to the Frost School of Business from William J. Atkins and Edward J. Crawford III, and is currently valued at $130,417. Each year for the past seven years, the SMIF has seen positive returns except for the recessionary year of 2008 when many funds lost their value. The SMIF’s return that year was a -37% but rebounded quickly in 2009 to +26.7%.
"What we are teaching our students is how to understand the diversity of funds," Davis said. "There is a lot of critical thinking, research and decision making. A student managed investment fund offers students the opportunity to invest real money, which tends to focus the mind more than simulated investments can ever do."
During the year an average of 10 students take part in the management of the fund. They are broken up into five teams of student managers focused on large-cap funds, mid- to small-cap funds, international funds, alternative investments and fixed income. They research and select the funds to invest in and use benchmarks to gauge their success or failures in the market.
Benchmarks include the S&P 500, Barclays Aggregate Index, Russell 2000, the MSCI-EM index and Wilshire REIT. For 2010, the Student Managed Investment Fund beat benchmarks six out of 12 months.
"The objective of the SMIF is to enrich our students' education through active participation in financial markets," said Dr. Chris Martin, Dean of the Frost School of Business. "Students not only gain invaluable experience in the management of an active portfolio, but also confidence in their analysis and decision making skills and an edge as they enter the job market."
Agreeing with Martin, Davis thinks the benefits to being a member of the Student Managed Investment Fund are enormous.
"In addition to improving quantitative and qualitative research skills, the Student Managed Investment Fund members gain experience that is sure to be a valuable tool in advancing career opportunities and employment options in the investments field," she said. "Besides that, what’s more fun than making money?"
About Centenary College of Louisiana
Centenary College is a private, four-year arts and sciences college affiliated with the United Methodist Church. Founded in 1825, it is the oldest chartered liberal arts college west of the Mississippi River and is accredited by the Southern Association of Colleges and Schools. Centenary is one of 16 colleges and universities constituting the Associated Colleges of the South and has been recognized as "One of the Best 373 Colleges" by the Princeton Review and one of "America's Best Colleges" and one of "America's Best Private Colleges" by Forbes.com. In 2008 Centenary College celebrated 100 years in Shreveport and Bossier City.