UMass Foundation鈥檚 Student Managed Fund Provides Real-world Trading Experience
Image by courtesy
11/19/2019
By Ed Brennen
Research + Patience = Profit
That鈥檚 the simple equation that helped a team of Manning School of Business students defend UMass Lowell鈥檚 crown in the Student Managed Fund challenge, an annual investing competition sponsored by the UMass Foundation.
The UML team, made up of more than two dozen finance students enrolled in Prof. Ravi Jain鈥檚 Student Managed Fund course last fall, researched portfolio managers and investment strategies before picking real stocks to invest in at the end of the semester.
The UML portfolio gained a 10.24 percent return for the fiscal year ending June 30, which was on pace with the benchmark S&P 500 Index return of 10.42 percent. UMass Dartmouth finished second in the competition, which also includes UMass Amherst and UMass Boston.
鈥淭he fund is the most real-world course I鈥檝e taken at UMass Lowell,鈥� says Louis Cirignano, a senior business administration major from Winchester who was among a dozen team members to receive a certificate 鈥� and a $5,000 top prize to invest back into the fund 鈥� during a recent luncheon at the UMass Club in Boston.
Cirignano, whose concentrations are in finance and entrepreneurship, credits the UML fund鈥檚 success to Jain鈥檚 emphasis on 鈥渧alue investing,鈥� which he says is 鈥渂ased heavily on financial indicators and long-term brand values.鈥�
Since the competition was launched in 2008, when the UMass Foundation gave each of the four campuses $25,000 in seed money to invest, UML has won five times (most recently in 2018) and has finished second in five other years.
鈥淭he fund is the most real-world course I鈥檝e taken at UMass Lowell.鈥� -Student Managed Fund member Louis Cirignano
Through capital gains and award winnings, UML鈥檚 fund has grown 11.4 percent annually to $160,000. The S&P 500 has grown 8.1 percent annually over that time.
More than 200 undergraduate students from the Manning School have participated in the fund over the past decade, while a new graduate fund competition launched last spring (the results of which will be announced in early 2020).
Jessica Maki, a senior business administration major from Taunton, says she learned 鈥渋ndustry-applicable skills and techniques鈥� in the course that would have taken her time to acquire on the job.
鈥淲ith the research, presentations and analysis leading up to the real-life choices at the end of the semester when we invest, the class is almost more akin to an on-campus internship,鈥� says Maki, whose concentrations are in finance and management information systems.
In addition to teaching students valuable career skills, Jain hopes the course helps demystify the investment world for them.
鈥淢ore important than earning high returns is helping students get over the fear of investing,鈥� says Jain, who does that by espousing what he calls a 鈥渟ound process.鈥�
First, students learn the philosophies of successful investors such as Warren Buffett, Charlie Munger and Catherine Wood. Then, they do a deep-dive analysis of well-established companies that have proven profitable over the long haul, looking at income statements, balance sheets and cash flows.
鈥淎 sound process is the best way to counter the continuous noise and volatility of financial markets,鈥� says Jain, who teaches the course using the Bloomberg terminals in the Pulichino Tong Business Center鈥檚 trading room. He credits the support of Manning School Dean Sandra Richtermeyer and the efforts of Judith Murphy, the UMass Foundation鈥檚 associate vice president and controller.
While Jain provides students with guideposts for their investment decisions, Maki says he leaves the final decision in their hands.
鈥淧rofessor Jain creates an environment that encourages us to question things and make our own decisions,鈥� says Maki, who found that the course was an opportunity to apply the theories she鈥檇 learned in previous finance classes.
Senior business administration major Kellsie Howard of Georgetown says the course 鈥渢otally changed my outlook鈥� on investing.
鈥淎nyone can go onto Yahoo! Finance and look at financial data of a given stock and make an investment decision,鈥� says Howard, whose concentrations are in finance and management. 鈥淏ut you don鈥檛 typically see a company that鈥檚 on the rise until, well, it鈥檚 actually on the rise 鈥� which means the investor wasn鈥檛 first to buy in.鈥�
Rather than 鈥済ambling鈥� on the 鈥渓atest fad鈥� in hopes of making a quick profit, Howard says she learned that investing requires patience.
鈥淪tudy a company and learn what makes them a good investment,鈥� she says. 鈥淭hen be patient and trust that the company you invested in will stay true to the promises that you believe to be true. And with that, a profit can be made.鈥�
It鈥檚 a formula that鈥檚 worked out well so far for UML鈥檚 Student Managed Fund.
