Training Student Equity Analysts and Utilizing Their Recommendations in Active Portfolio Management
29 Pages Posted: 5 Jun 2012 Last revised: 26 Jun 2012
Date Written: May 1, 2012
Student investment funds are currently in operation globally at many large business schools and even small liberal arts colleges. Their management follows a wide variety of processes, from unsupervised to highly professional. While all investment managers labor to deliver alpha in a diversified portfolio, there are additional challenges to implementing a fully professional approach within a university setting, the largest being the constraint on time due to the school curriculum. This paper explores whether it is realistic to expect value-added from student analysts, and what training and infrastructure are required to increase the odds of successful active portfolio management inside an educational institution. The key goal of a student fund is education, not investment performance, but the more professional the investment operation, the more enlightened will be its graduates. A case study of one ten-year-old student fund illustrates a unique approach which seeks to successfully address these challenges. The fund’s management is formally integrated within a graduate finance program and has generated over 200 basis points of alpha per annum.
Keywords: student investment funds, graduate curriculum, portfolio management, student training
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