Educational Values of Student Managed Investment Fund Consortium Activities

Business Conditions and Economic Analysis: An Experiential Learning Program for Economics Students

PurposeThe purpose of this paper is to describe lessons learned from integrating student-managed investment funds (SMIFs) in finance education systems based on the case of the Raymond Rebsamen Investment Fund at the Sam M. Walton College of Business, University of Arkansas.Design/methodology/approachThe paper has three main parts. First, it describes how the Rebsamen Fund operates as an integral part of undergraduate and graduate finance education at the Walton College. Second, it explains how the Fund spawned creation of sister funds, an institute, a 62-seat trading center, and coordinates with other agencies and stakeholders. Third, it lists strengths, weaknesses, opportunities and threats facing future SMIF integration into finance education.FindingsThe use of innovative experiential learning solutions like SMIFs bridging theory and practice can be enhanced by integrating them into effective systems of finance education.Practical implicationsLessons learned include benefits of SMIF management by class, licensing and professional certification, trading centers, use of SMIF finances to support other components of education, proliferation of SMIFs, SMIF stimulation of academic units like centers/institutes, SMIF facilitation of collaboration, importance of tying SMIFs to student finance clubs, coordination of industry speaker visits between SMIF classes and clubs, and use of SMIFs in addressing cutting-edge challenges.Originality/valueThis paper discusses how SMIFs can be integrated in finance education.

Student Managed Investment Funds (SMIF), an experiential approach to learning about portfolio theory and practice, are increasingly prevalent in financial education in business schools (Boughton & Jackson, 2019). However, there is very little empirical evidence regarding the determinants of SMIF financial performance. Following a review of the literature, this paper presents an exploratory study of Gonzaga University’s SMIF model and results compared to nineteen other schools in a regional competition. The results suggest that SMIFs using a class structure and spanning more than one semester outperform those that do not. Implications for future SMIF research and practice are discussed.

PurposeThe purpose of this paper is to investigate the embedded challenges of student-managed investment funds (SMIFs) and provide recommendations to work with these issues.Design/methodology/approachThe paper analyzes and critiques the ways SMIFs are structured and operated and makes several suggestions.FindingsThe paper details seven unique challenges of SMIFs compared to professionally managed investment funds. The source of these challenges is that SMIFs are set up for educational purposes, which makes the operation and management different from performance-focused investment funds. The paper proposes several recommendations on how to align the educational focus with fund performance.Originality/valueThe paper is original and based on primary research.

PurposeThe purpose of this paper is twofold. First, it endeavors to document the current state of environmental, social and governance (ESG) pedagogy within undergraduate finance courses of business schools, and second, it seeks to show how business schools can leverage student managed investment funds (SMIFs) to swiftly integrate ESG pedagogy.Design/methodology/approachThe study is comprised of two sections that use different methodologies. The first part of the study involves a manual content analysis of undergraduate finance course textbooks, and related instructor materials are used to estimate the average coverage of ESG-related topics. Next, a case study of a SMIF that has recently integrated an ESG framework is provided to illustrate how this pedagogical innovation is effective in teaching ESG skills.FindingsThe findings of the content analysis of the three most commonly used textbooks in a sample of 17 Canadian universities, as well as associated instructor material, provide evidence that the primary emphasis in traditional curriculum remains on the shareholder, with little attention paid to ESG factors. The case study of an existing SMIF clearly demonstrates how a student-led development of an ESG framework provides the setting for effective, experiential learning.Originality/valueThis study shows that while traditional teaching settings, like lectures, may be slow to adapt to the rapidly changing needs of industry, nontraditional teaching venues, such as SMIFs, can be leveraged to meet industry demand for ESG skills, thereby closing the skills gap, enhancing student employability and increasing the relevance of business school education.

Socially responsible investing and student managed investment funds

PurposeFor undergraduate-only, AACSB-accredited business programs, establishing a student managed investment fund (SMIF) can be an enormous, but potentially worthwhile, undertaking. Resources are often very limited – especially for faculty where their time is already consumed by teaching, administrative and publishing requirements. The purpose of this paper is to reflect on the five-year experience at Stonehill College and suggest considerations for undergraduate institutions seeking to establish such programs.Design/methodology/approachThis is a retrospective on the experience of designing and implementing a SMIF-based academic program. Student education and professional skill development should be the primary outcomes evaluated with such programs. Included are brief perspectives on the program from its alumni with commentary on perceived value in one to four years following graduation.FindingsThe experience to date suggests that establishing a SMIF at a smaller, undergraduate-only institution is challenging. For a SMIF to generate educational returns commensurate with its cost, it needs to be part of a comprehensive, academic-driven program that garners broad support by the business faculty and administration of the college. Personal reflections by its program alumni suggest that it can be a very meaningful academic and experiential learning opportunity.Research limitations/implicationsThis paper is focused largely on the experience of one institution. Further insights may be attained by a broader, unbiased analysis of institutions where SMIF programs have succeeded or failed to meet similar objectives.Practical implicationsThe authors suggests that the creation of a SMIF program at smaller, undergraduate-only institutions faces unique challenges relative to larger, more well-endowed universities. These challenges can be overcome but not without a broad internal commitment. These programs, if done in a comprehensive way, can significantly impact student outcomes.Originality/valueThe retrospective offers up-to-date insights on the value and challenges of starting a SMIF program at smaller-sized, undergraduate-only academic institutions.

PurposeThe purpose of this paper is to expand the domain of experiential learning by sharing the experiences of establishing and developing student managed investment fund (SMIF) at West Virginia University (WVU).Design/methodology/approachThis paper discusses the structure and performance of the SMIF at WVU within the context of experiential learning literature in financial education.FindingsThe adopted structure and coordination of SMIF appears to be effective in bridging the gap between classroom and the professional world, while significantly enhancing student experiential learning opportunities, engagement and professional preparedness.Originality/valueThe paper presents experience of launching and operating a SMIF at WVU, which has recently joined the ranks of R1 research universities. While the importance of research productivity has been on the rise, the significance of strengthening student experiences has also been growing and maintaining the balanced approach can be challenging. Enrollment in WVUs undergraduate finance program grew 33 percent over the past three years. With growing enrollment and competitiveness of finance degree programs, experiential learning opportunities like WVU’s SMIF are an essential for an evolving curriculum.

PurposeThe creation and formation of a student managed investment fund (SMIF) is a risky proposition for all stakeholders involved in the process. These risks include reputational risks for the individuals involved, fiduciary risks for the school’s Board of Trustees and monetary risks for the university itself. The purpose of this paper is to explain and detail how these risks can be mitigated through specific oversight committee (OC) construction, distributional/benchmarking requirements for the fund and detailed trading rules (exit points, short sale constraints, loss provisions, etc.) for fund managers, which can all be codified in the bylaws of the SMIF.Design/methodology/approachThis investigation is done through a specific case study – the 2017/2018 formation of the George Mason University SMIF. As head of the OC for the fund and lead architect in the creation of the fund for the GMU faculty, the statements below come from firsthand accounts of dealing with all parties of interest and firsthand knowledge of the year-long process of managing all risks, which culminated in being granted endowment capital from the Board of Trustees to officially begin the SMIF on May 1, 2018.FindingsFirst, this paper details how a complete investment policy statement can be used to mitigate the fears and concerns of all parties that have a fiduciary duty to the university’s endowment (which the students will now be partially managing). These bylaws include statements on the risk characteristics of the fund, distributions back to the endowment, oversight features and benchmarking. Next, written into the bylaws of the fund can be several benchmarking and distributional requirements to mitigate the risk exposure of the SMIF’s holdings. Finally, aside from benchmarking constraints, another successful risk management technique can be rules written directly into the investment policy statement that define exit points, tracking error, short sale constraints and other rules for trading.Originality/valueThis paper offers a roadmap by which these risks can be mitigated through the content of an investment policy statement/bylaws. The author details several techniques that eventually led to all stakeholders at GMU in signing off on the formation of an SMIF, and endowment capital being given to the fund as a seed investment. This is a firsthand account of this process and the author has not seen it documented in the literature anywhere else.

PurposeThis paper aims to explore how the student fund managers perceive the benefits of being part of the fund. Furthermore, this paper examines the country-specific challenges of setting up and managing a student-managed investment fund (SMIF) in India.Design/methodology/approachQualitative content analysis technique is used to identify, compare and retrieve critical themes about the present state of SMIF clubs in India. The data collection method involved structured, in-depth online interviews with ten student fund managers from various higher educational institutions in India.FindingsSome of the study’s key findings indicate that the existence of SMIFs as part of learning facilitates group decision-making and peer learning. Additionally, this study brings to light specific issues related to registration, incorporating real-world practices and integrating SMIF into the academic curriculum.Social implicationsThe outcomes of this study shall be of use to students and the teaching fraternity across Indian colleges and universities who aspire to set up SMIFs as part of experiential learning. This study will also help existing SMIF clubs in India understand how their counterparts work and can consequently improvise their organizational structure and functioning.Originality/valueTo the best of the authors’ knowledge, this is the first interview-based evaluation of the present structure of SMIFs structured as clubs in India.

PurposeThe purpose of this study is to develop an investment strategy designed both to enable student‐managed investment fund (SMIF) students to more quickly build out their portfolio at the beginning of the academic year and to give them some exposure to quantitative approaches to investment management.Design/methodology/approachThis study uses data and software that would be readily available to typical SMIF students to develop both an asset‐allocation model and a security‐selection model that can be described as a long‐flat (or synthetic protective put) equity strategy with a momentum‐based style‐rotation overlay.FindingsOver the time period since the requisite style‐based ETFs began trading, the composite strategy would have outperformed the S&P 500 index during both market downturns and market upturns, providing better than market returns at lower than market levels of risk.Originality/valueThe key innovation of this paper is the development of a quantitative investment strategy tailored specifically to meet both the educational and the portfolio management needs of SMIF students; a secondary innovation is the demonstration of the efficacy of a style‐rotation strategy, in contrast to the more typical sector/industry‐rotation type of strategy.

PurposeThe purpose of this paper is to look at how the faculty at West Point uses a student-managed investment fund (SMIF) to contribute to the development of Army officers.Design/methodology/approachThe United States Military Academy at West Point started a student-managed investment fund in 1983. The Economics program, which has four finance classes within its curriculum, hosts the student-run SMIF. The students (cadets) in charge of the SMIF have recently started pursuing a risk parity strategy. This paper discusses the challenges that arise from taking on this strategy.FindingsIt argues that investment management, especially with a risk-aware strategy, helps the cadets learn to manage the risk/reward tradeoff as well as help them work on leadership skills, both of which will help them as future Army officers.Originality/valueThe authors suggest that the recent student-initiated changes to the SMIF at West Point highlight some of the leadership opportunities inherent to approaching a SMIF from a risk-aware, portfolio-based perspective. This can teach students important experiential lessons about how to manage prudent risk both in finance and as a leader.

This paper summarizes the results of a web-based survey of 441 U.S.-based college and university Student-Managed Investment Funds (SMIFs). Results include three areas not previously included in SMIF research. Information about student demographics, fund policies, and transparency are included. Results indicate that the majority of students participating in SMIFs are white males, with few schools specifically targeting recruitment of females and minorities to the finance and investment field. Results also indicate that most funds are managed by undergraduate students, use the S&P 500 as a benchmark, and average 30% portfolio turnover each year. Results indicate a mix in the dollar value of SMIFs, of dividend policies, and of out of class activities associated with the SMIF. Finally, while professional money managers must provide timely and transparent information about fund performance, fees, and large holdings, the vast majority of SMIFs do not provide this information publicly, in part or in whole.

This study provides a road map for creating and operating a student-managed investment fund (SMIF) as an experiential learning opportunity in commodity market analysis. We describe the reasons for implementing a SMIF and the benefits it offers relative to traditional simulation approaches. We outline the necessary steps for starting a SMIF and explain its organizational structure. We discuss a SMIF’s operation and main activities, which include recruitment, training, trading, and interaction with the client and alumni. The implications of participating in a SMIF are reviewed within a cost-benefit framework.

Chapter 3 - Investing with exchange traded funds