Student investment fund reaping big rewards
May 08, 2014,
SIU students are demonstrating they know how to buy low and sell high.
The Saluki Student Investment Fund, founded in 2000 when SIU alumnus Omar Winter donated $25,000 to the College of Business, gives students hands-on experience managing money.
About the same time, the SIU Foundation allocated $200,000 for SSIF to manage under the guidance of Mark Peterson, former faculty adviser for the investment fund. The SSIF has proved not only to be an effective teaching tool, but a lucrative one as well.
“Over its first 10 years, Dr. Peterson advised the group, and it did great,” Jason Greene, professor of finance and the fund’s faculty advisor, said. “The students did really well, taking it very seriously. By 2010, the $225,000 initial investment had grown to $350,000.”
The fund did so well the SIU foundation invested another $1 million in the fund in 2011. Its assets have since grown to $1.43 million, with an annualized return of 8.2 percent.
“One of our biggest points of pride is definitely our return on investment,” Carlos Benedict, senior finance major, said. “We have outperformed our benchmark over the last 7 to 10 years, so we think this speaks to our investment philosophy and process. We have beaten 75 to 95 percent of our competitors.”
The student-led fund operates like an investment firm, after a mandate handed down by its client, the foundation, to invest in a portfolio of mid-cap stocks in the S&P 400.
The 30 to 35 students who operate the fund are divided into market sectors, with each sector presenting buy/sell decisions, along with research and analysis to defend their recommendations.
“This experience is very similar to what you would find in the real investment world,” Rachel Crofts, senior accounting/finance major, said.
Alumni donated money to give the fund access to 12 Bloomberg terminals -- a tool almost all investment firms use to gather news, company information and up-to-the second market data. Investment firms pay $20,000 for one terminal, but Bloomberg provided the school 12 terminals for $60,000.
The fund is not just about making money, but it’s also about teaching students how to be ready to make money for a future employer.
“We’ve had two students hired by an investment management firm that manages more than $100 billion,” Greene said. “It’s a well-respected firm in the industry.”
The students take the management of the funds very seriously, understanding they’re not only managing real money, but someone else’s money.
“I’m very proud of how the students understand the SIU Foundation is essentially their client, this it's the client’s money and the client has certain expectations,” Greene said.
The students don’t receive course credit nor are they paid for the 10 hours a week of research and analysis they do for the fund, but that doesn’t lessen their commitment.
“It takes time and dedication, just as a sport does,” Megan Rhodes, senior accounting major, said. “I consider this my sport. It takes just as much dedication as football or baseball or softball.”
A graduate student investment fund was started in 2013, with an investment of $500,000 by the SIU Foundation.