Studying Student-Managed Investment Funds

by Will Ashworth | July 12, 2012 7:00 am

Every spring for the past 12 years, business students from around the country have gathered at the University of Dayton Arena to talk shop. RISE[1], which stands for Redefining Investment Strategy Education, allows budding investment stars to share knowledge and best practices with leading investment professionals. It has become the most prestigious student investment conference in the world.

The best investors are always learning, whether they’re 24 or 64. With that in mind, I thought I’d highlight stock picks from some of North America’s leading student-run investment funds.

Note: One of the problems with using student-managed investment funds as a source of investment ideas is that these students are already very busy going to school. As a result, reporting tends to be a little dated, their ideas are valuable just the same.

My first recommendation comes from the American University Kogod School of Business in Washington, D.C. In November 2011, analyst Seth Borko recommended Continental Resources (NYSE:CLR[2]), an independent oil and gas company best known for its presence in the Bakken Shale field in North Dakota[3]. At the time, its stock was trading at $66.07 with a three-year price target of $117. It’s basically flat as of July 10.

At New York University’s Stern School of Business, the Michael Price Student Investment Fund divides its portfolio into three separate components: Growth Fund, Value Fund and Small Cap Fund. Like many mutual fund managers, its biggest individual stockholding in the Growth Fund as of the end of February is Apple (NASDAQ:AAPL[4]) at 6.2% of the portfolio. However, the biggest holding in the Growth Fund by a wide margin is the iShares Russell 1000 Growth Index (NYSE:IWF[5]) with a 25% weighting. ETFs represent a whopping 42% of the portfolio.

Obviously these students are trying to tell us something. Will we listen? As for the Value Fund and Small Cap Fund, their largest holdings were Ford (NYSE:F[6]) and Midas (NYSE:MDS[7]), respectively. Both of these funds held more than 50% in index ETFs.

The award for best investor communication goes to the University of Iowa’s Tippie College of Business, whose portfolio is current as of May 14, 2012. It’s no wonder they’ve won many awards for their investment prowess. Year-to-date as of May 14, its portfolio was beating the S&P 500 by 400 basis points.

With 14 stocks in its fund, the biggest is YUM! Brands (NYSE:YUM[8]) with a 13.4% weighting. A close second is Apple at 13%. When you get a free moment go check out their website[9]. It’s one of the best I’ve seen in terms of content and presentation.

My last recommendation comes from Canada’s East Coast and St. Mary’s University. The Impact Fund, which is the student-managed investment fund at SMUs Sobey School of Business, had a total of 22 holdings at the end of 2010 (not very timely I know), including slightly less than 10% in the iShares S&P/TSX Composite Index (TSE:XIC[10]), which invests in the largest and most liquid stocks trading on the Toronto Stock Exchange.

For those who don’t have access to the Toronto exchange, you could always buy the Global X S&P/TSX Venture 30 (NYSE:TSXV[11]), which invests in junior resource companies. Unfortunately for the business students at SMU, the iShares fund is down 10.8% since Dec. 31, 2010, compared to an increase of 6.6% for the S&P 500. Maybe next time.

Finding information on some of these funds isn’t easy. However, if you take the time to do so, I think you’ll find some of these university students are doing some excellent research. Whether you act on any of their stock picks is up to you.

As of this writing, Will Ashworth did not own a position in any of the stocks named here. 

  1. RISE:
  2. CLR:
  3. Bakken Shale field in North Dakota:
  4. AAPL:
  5. IWF:
  6. F:
  7. MDS:
  8. YUM:
  9. check out their website:
  10. XIC:
  11. TSXV:

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