About the SSIF

About Us

Established in May 2000, the Saluki Student Investment Fund (SSIF) exists to provide SIU undergraduate and graduate students with hands-on experience in portfolio management and investment research. As such, the SSIF is modeled after a real investment management firm. SSIF students are focused on making the best possible investment decisions on behalf of their primary client, the SIU Foundation. The SSIF’s investment philosophy is to capitalize on opportunities through focused research. The SSIF’s competitive advantage is students’ unique and unbiased perspective and their ability to spot trends in the markets, especially those that are perhaps driven by or favored by their generation.

In implementing the SSIF’s investment process, members work in teams that focus their research on companies within specific sectors, such as the technology, financial, or healthcare sector. Each team’s goal is to choose the companies within their sector that give the portfolio the best chance to outperform the midcap equity benchmark. This requires students to put their class lessons to work within a professional environment. Moreover, students learn to collaborate and to take responsibility for their analysis and decisions as they make the case for their investment ideas.

The SSIF is open to both undergraduate and graduate students from any major. In recent years, SSIF students have been majors in Accounting, Analytics, Finance, Management, Marketing, and Mathematics, with a majority being from the College of Business and Analytics. Since 2000, numerous SSIF members have gone on to be employed at firms such as Amazon, ADM, Bank of America, Caterpillar, Edward Jones, Fitch Ratings, NISA Investment Advisors, RGA, and Stifel.

Faculty Advisor

Dr. Timothy Marlo, Clinical Associate Professor of Finance,

is the faculty advisor to the SSIF. He is a four-degree, summa cum laude graduate of Southern Illinois University. Marlo received bachelor degrees in accounting and finance in 2001, a master in business administration degree in 2009, and a doctorate in business administration, specializing in finance, in 2016. Immediately after graduating from SIU in 2001, he passed the CPA exam and began serving as an accountant for the Illinois Department of Agriculture. During this time, Marlo moonlighted at a local accounting firm preparing individual tax returns and performing tax research for clients. From 2005 to 2015, Marlo served as the controller for the SIU Alumni Association where he oversaw the Association’s financial operations and multi-million investment portfolio. During his tenure as controller, the Association’s assets doubled due to improved operational efficiencies and investment growth.

Since 2016, Marlo has served as a clinical associate professor for the SIU College of Business and Analytics. Marlo is able to utilize his work experience and innate knowledge of business to present accounting and finance theories and concepts in a pragmatic approach. In September 2016, Marlo became the faculty adviser for the Saluki Student Investment Fund. These student-led investment funds manage over $4 million for the SIU Foundation. On top of his teaching and advising, Marlo has published and presented his research on investments, in particular, on mutual funds. He continually explores actively managed mutual fund holdings and performance to better understand fund manager skills.

For more information about the Saluki Student Investment Fund, please contact the faculty advisor, Dr. Timothy Marlo at tmarlo@siu.edu.

SSIF History

The Saluki Student Investment Fund was established in June 2000 through the generosity of Mr. Omar Winter and his wife Carol, both alumni of the Southern Illinois University Carbondale. Mr. and Mrs. Winter provided $25,000 to start the student investment fund. Shortly thereafter, the SIU Foundation provided $200,000 for the students to manage on its behalf – in essence, the SIU Foundation hired the SSIF as one of its portfolio managers. The goal of Mr. and Mrs. Winter and the SIU Foundation was to provide SIU undergraduate students with hands-on experience in portfolio management and investment research.

Dr. Mark Peterson, Gordon & Sharon Teel Professor of Finance, was the inaugural faculty advisor to the SSIF and remained its advisor over its first decade. During that first decade, with participation from more than 60 SIU undergraduates, the fund’s assets under management grew to over $325,000. When Dr. Peterson stepped up as Chair of the Department of Finance in 2010, Dr. Jason Greene, Professor of Finance, became the SSIF faculty advisor.

In April 2011, the SSIF made a proposal to the SIU Foundation to increase its mandate from approximately $370,000 to $1,000,000. In recognition of the diligence of the SSIF students in managing the portfolio for the SIU Foundation, the Foundation’s Investment Committee approved the increase and transferred an additional $630,000 to the account managed by the SSIF in May 2011.

Since the SSIF was originally chartered for undergraduate students only, graduate students did not have the opportunity to learn more about business and investing through this hands-on experience. During Fall 2012 and Spring 2013, a handful of College of Business graduate students drafted a proposal to create the Graduate Student Investment Fund (GSIF). The graduate students created their investment philosophy and process and proposed that they manage a large cap core strategy on behalf of the SIU Foundation. Based in part of the success of the undergraduate SSIF and the strength of their proposal, the SIU Foundation approved the GSIF for a $500,000 mandate and funded the account in August 2013. The GSIF managed against the S&P 500 large cap benchmark, while the SSIF manages against the S&P Midcap 400 Index. The two organizations operated separately until the summer of 2018 when the GSIF members and assets were absorbed by the SSIF. With this merger, graduate students are now permitted to join the SSIF for this invaluable hands-on experience.

Kraft Trading Floor

The Burnell D. Kraft Trading Floor, located on the third floor of the College of Business and Analytics, is a state-of-the-art classroom that serves as the primary meeting room for the SSIF. The room was completed in November 2003 thanks to a generous donation from Burnell D. Kraft. Mr. Kraft graduated from the College of Business and Analytics in 1956 and went on to become senior vice president for Archer Daniels Midland Company. In reference to the trading room, Mr. Kraft notes, “You can get five to ten years of experience in a year or two using the technology you have here.” Indeed, thanks to the continued support of Mr. Kraft and the generosity of a number of other benefactors in the College of Business and Analytics, seven Bloomberg terminals were added to the trading room in June 2012. These terminals offer all College of Business and Analytics students access to up-to-the-second news and financial market information. Bloomberg also provides a wealth of information to inform the analysis of SSIF members as they research investment ideas for the SSIF portfolio. Finally, by integrating the use of Bloomberg into the operations of the SSIF and into most finance electives, finance and business students graduate from SIU already proficient at using a key tool used by the most successful financial firms.

How the SSIF Invests

Investment Philosophy

The SSIF believes that equity markets are generally efficient; however, opportunities exist for a fundamental active strategy to outperform a passive benchmark.

The SSIF aims to capitalize on these opportunities by focusing on mid-cap stocks that are potentially less researched than large-cap stocks, yet have sufficient liquidity and available value-relevant information.

The SSIF’s competitive advantage originates from focused research and an unbiased student perspective of the market, operating outside of potential distractions of large investment management firms.

Investment Process

The SSIF Investment Process is designed to capitalize on the opportunities in the market in which a company’s price does not reflect its true fundamental value. In addition, specific features of the Investment Process manage tracking error – the risk of the strategy relative to its mid-cap core benchmark. The Investment Process can be thought of in three distinct stages: Planning; Portfolio Construction; and Implementation and Feedback.

Planning

The process defines the eligible universe of available investments based on maintaining consistency with the mid-cap core mandate and the S&P 400 benchmark. Any stock within the S&P 400 Midcap Index is eligible for the portfolio. Up to 10% of the portfolio may be held in stocks outside the S&P 400 as long as the stocks are in the 10^th to 90^th capitalization percentile of the S&P 400 and are not constituents of the S&P 500 (large cap) or S&P 600 (small cap) indexes.

To facilitate focused fundamental research, stocks are allocated to sector teams based on the Global Industrial Classification sector membership. Sector teams include: Consumer Discretionary/Staples and Communication Services; Energy and Utilities; Financial Services; Healthcare; Industrials; Information-Technology; Materials; and Real Estate.

Portfolio Construction

The portfolio is constructed using a hybrid approach of fundamental research and quantitative optimization. The goal of the fundamental research is to give the portfolio the opportunity to outperform the benchmark by identifying stocks with growth potential. The quantitative aspect of the process aims to manage the risk of the portfolio relative to the benchmark.

Each sector team is responsible for selecting stocks within its sector for inclusion in the portfolio. Based on in-depth fundamental research, selected stocks represent those stocks with the most growth potential in order to contribute to the portfolio’s outperformance of the benchmark over time in the team’s view.

Using the stocks selected by the sector teams, each stock’s specific target weight is set by a quantitative optimization process. The process uses historical returns as an input to estimate the risk of the portfolio relative to the benchmark. Within target parameters, such as maintaining the portfolio to be sector-neutral, the optimization’s objective is to maximize a modified information ratio of the portfolio against the benchmark index.

Implementation

The SSIF seeks to implement the portfolio as efficiently as possible. SSIF students monitor the portfolio on an ongoing basis, even during periods when classes are not in session, and make timely reports on the performance of the portfolio. As sector teams evaluate new information and decide to buy or sell names, the portfolio is rebalanced in a disciplined manner. During rebalancing, trades may be made in stocks whose portfolio weight is significantly under- or over-weighted relative to its target weight or when necessary to maintain sector neutrality. In all cases, the implementation is designed to consider whether the expected benefits outweigh the direct and indirect costs of trading.