Student-Managed Investment Fund Successful in Tough Market

Despite bleak news from Wall Street, some students in Illinois State University's College of Business are experiencing success in managing a portfolio of financial assets valued at about $275,000 (as of Nov. 1, 2008).  Like so many, the student-managed portfolio has taken a financial hit in the past few months, but has fared better than many thanks to the students' careful market research.

The investment portfolio is the on-going project in the Finance, Insurance and Law Department's Educational Investment Fund class.  Students in the class, taught by Professor Thomas Howe, manage the investment fund, now in its 26th year.  The fund was set up through the Illinois State University Foundation as an opportunity for finance majors to gain hands-on experience in market research and investment management.

Finance majors must apply and be accepted into the Educational Investment Fund class. 

Each semester about a dozen highly-motivated students become the stewards of the investment portfolio.  The semester is spent doing market research on a number of companies in preparation for making stock buying and selling recommendations. 

"The Educational Investment Fund is a wonderful way for students to put theory and research into practice when it comes to managing an investment portfolio," said Gary Koppenhaver, chair of the Department of Finance, Insurance and Law.  "Since Nov. 1, 2007, the portfolio has fallen 34.7% compared to the 37.5% decline in the Standard and Poor's 500 stock index over the same time.  The performance difference is due to the hard work of the students in stock selection and the strong mentoring provided by the alumni advisory board of investment professionals."

Throughout the semester an alumni advisory board, consisting of 15 investment professionals, mentors the class on the workings of financial markets and professional standards.  The advisory board members do not make specific investment recommendations, leaving the final judgment up to the students.  At the end of each semester, students make their investment decisions and pass the fund into the hands of the next class.

"This is a wonderful opportunity for these students to learn about financial markets," said Aaron Vaughn, chairman of the advisory board and a senior equity analyst with Edward Jones in St. Louis.  "Achieving another period of outperformance relative to the S&P 500 is a testament to their hard work,"

Students in the Fall 2008 semester Educational Investment Fund class are Nick Cook, Monticello; Brett Fox, Lisle; Chris Franchi, Oakwood Hills; Vanessa Funk, Glendale Heights; Ken Kamentsev, Wheeling; Joshua Kushner, Bloomington; Cordero Mobley, Chicago; Ryan O'Hara, Joliet; Ronnell Robinzine; LeAnn Spivey, Channahon; Bryant Taylor, Bloomingdale; and Brad Phillips, Lisle.