Student Managed Investment Fund sees significant gains in volatile market
College of Business student-analysts recently presented the Student Managed Investment Fund (SMIF) annual report to industry professionals during their advisory board spring meeting. The $1 million fund, established through the generosity of alumni, is managed by undergraduate students who are responsible for all investment research, portfolio positions, and reporting.
Since inception, the fund has managed institutional funds through periods of considerable uncertainty—trade wars with China, the COVID-19 pandemic, and elections. At present, the SMIF is considerably outperforming the benchmark (CPI + 4%) with annual gains of 37 percent in a market environment that has been, according to Associate Professor of Finance Dr. Bill McCumber, “challenging for the most experienced and thick-skinned professionals.”
“When everyone is panicking, it’s difficult to keep a cool head,” said McCumber, who teaches the SMIF course. “The students had to learn to do this—and to understand that institutional money management is about responsibly taking a long-term view of events.”
This year’s student-analysts included Carlton Adams, Samuel Baldwin, Lauren Killebrew, Jacob Lyons, Sajeivan Nallanthan, Alex Reed, and Garrett Scott.
“Not only did they weather the storms of market volatility during a pandemic, but they were able to identify and invest in sectors and regions of the world that are recovering more quickly than most,” said McCumber. “In other words, these young analysts took a deep breath, surveyed the scene, and acted in an incredibly professional manner to the benefit of the fund and its future beneficiaries.”
Scott, a senior finance and music major from Frisco, Texas, agreed that investing in the current global climate was akin to “drinking from a firehose.”
“There’s so much to learn and lots of information to take in about the state of the world and investing,” said Scott. “Suddenly, it’s my job to be an expert on all of it because there’s real money on the line.”
Over the five quarters he spent working as a student-analyst, Scott experienced the unpredictable and rapidly changing financial environment. “You spend a lot of time analyzing the world only for events completely out of anyone’s control to wipe out all the progress—and then some—the fund has made. In these times, it’s important to keep a long term outlook and not let all the information flying around during the chaos affect your judgment.”
The students, through careful analysis, identified areas of the U.S. and global economies that were predicted to recover faster than the overall U.S. economy. According to Scott, their assumptions were correct, leading to terrific returns over the past year.
“I’m most proud of our success in putting cash to work in sectors and regions that had the strongest recovery from the COVID-19 pandemic,” he said. “Back when the whole stock market was crashing, everything looked bad, but it was still our job to do the best we could.”
For Lyons, a senior finance major and concurrent MBA student from Jennings, his time in the SMIF provided valuable experience that he will now take into the real world.
“I learned a lot about the professional world of money management,” he said. “Working in a large team of people to manage a portfolio in a fast-changing world has been an experience that I am glad to have received. Working with the other student-managers as a team on the final report allowed me to build connections and feel a sense of pride in the success that we accomplished together.”
Lyons viewed the final presentation to the SMIF Advisory Board as a chance to show their collective success—the highest return yet for the fund—and knowledge gained. Board members offered feedback, asked questions, and praised the student-analysts for their dedicated work over the past year.
“The last 18 months have given these students a unique look at how volatile financial markets can be,” said Lucius McGehee, ’85, who serves as executive vice president for Argent Financial Group and is a member of the SMIF Advisory Board. “Learning to remain true to your assessments and not get caught up in the frenzy is a lesson that they have personal experience with now. There is nothing like real-world experience.”
Experiential learning—those real-world experiences—is integrated into each major within the College of Business to enhance learning outcomes. In addition to the Student Managed Investment Fund for finance students, examples include Bulldog Marketing Consultants for marketing students and the Regional Economic Analysis of Louisiana (REAL) Report for economics undergraduates.
For more information about the Student Managed Investment Fund, visit business.latech.edu/finance.