September 27, 2013

Grad students gain investment fund experience

by Christi Mathis

CARBONDALE, Ill. -- Graduate students in Southern Illinois University Carbondale’s College of Business now have a half-million opportunities to turn their classroom knowledge into valuable hands-on experience.  

The SIU Foundation is funding the new Graduate Student Investment Fund (GSIF), giving graduate students the opportunity gain expertise in portfolio management and investment research by managing $500,000 in Foundation assets. 

The new GSIF program complements the existing Saluki Student Investment Fund (SSIF), a College of Business organization that provides undergraduate students with valuable portfolio management and investment research experience.

“We are building on a very successful tradition of providing our undergraduate students, and now our graduate students, with invaluable real-life management experience.  We feel strongly that the SIU Foundation is our client.  We run this like a real investment management firm and every decision we make is made with our client’s best interests in mind,” said Jason Greene, finance professor and SSIF/GSIF adviser. 

The SSIF launched in June 2000 with $200,000 in SIU Foundation assets to manage, along with $25,000 donated by SIU alumni Carol and Omar Winter for the purpose of establishing a student-managed investment fund. About 30 students participate each year.  

The undergraduate students achieved remarkable success, growing the initial investment to about $350,000.  In 2011, the Foundation increased the portion of assets managed by SSIF to $1 million.  The students have continued to make wise decisions and the fund now boasts about $1.26 million in assets, Greene said.

“Over the last ten years, we have outperformed 90 percent of professional managers in terms of growth of assets.  The participating students have a faculty adviser and work with the SIU Foundation and the College of Business but the students themselves make all of the decisions and they have done very well,” Greene said. 

Graduate students wanted to get involved as well, but the SSIF was chartered for undergraduates.  A few graduate students were able to assist as consultants but wanted to further enhance their own experience, so several made a formal proposal to the Foundation that a new fund be set up for graduate students to manage.  The Foundation accepted the proposal and recently established the GSIF with $500,000 in funds.

The two funds, both operating just as other external investment fund managers operate, will be distinctly different and separate, Greene said.  The SSIF handles the investments in the S&P MidCap 400, mid-sized publicly managed U.S. equities, while the GSIF will manage the investments in larger firms, the S&P 500.   More than a dozen graduate students have already expressed interest in participating in the GSIF and it is just getting started. 

“Each fund has a separate mandate and will operate distinctly but both give our students exceptional learning experiences,” Greene said.  “They learn about fundamental business strategy, research and development, budgets and the viability of companies.  They study and get to know the best companies within their indexes and have very engaging discussions about business strategy issues.  And, they are growing the assets of the SIU Foundation in the process.”