The Student Managed Investment Fund: Outperforming the S&P 500 and gaining confidence

If you have been following the stock market, you know that when COVID-19 hit, investors reacted, companies were impacted, and large-scale change began accelerating for many businesses we follow on the ticker. Participants in the college’s Student Managed Investment Fund had the rare experience of managing $2.3 million of WMU Foundation funds during fall of 2020. Seeing securities through the lenses of the pandemic and the election exposed students to world events that it might usually take them five to 10 years, or more, to encounter in the field. 

And when your fund owns shares in both Amazon and American Airlines, you get a firsthand look at the ways that companies are impacted by what is happening around the world, and how to strategize for the long-term.

Austin Ryder knew he wanted to take the course from his first days in the business college. “Not a lot of universities offer an opportunity like this. When I began my finance major, I noticed this class in the course catalog.” His instructor for Investment Analysis, Dr. Bolortuya Enkhtaivan, assistant professor of finance, saw his aptitude. “She told me that I asked the right questions to be successful managing investments and encouraged me to apply for the course.”

And the experience has exceeded his expectations.

“This class has helped cement the idea that successful investments are long-term investments and that you can’t trade in the controversy of the day.”

He also honed his communication skills in a way that he never imagined. “In the end, this industry is as much about communication as it is about analysis and synthesis. You need to be a really strong orator, so you can pitch your approach. Single securities are much riskier than mutual funds, so you have to know the company you are pitching like the back of your hand. Being convincing in a short amount of time is exactly what you must do as an entry-level analyst, so it’s excellent preparation.”

Ryder feels he was able to make the mistakes he needed in order to learn how to be an effective analyst in a sandbox environment where he could safely practice, fall short and get better. Now, he feels prepared to interview for full-time positions. “I have had several months of investment management experience that I can speak about with employers. My onboarding as an analyst will be much shorter, because the best practices are all second nature now. It’s a competitive advantage.”

Fellow classmate and Fulbright scholar, Safa Saeed, appreciates that the class is centered on critical thinking.

“Other courses teach you specific information, but this class really teaches you to think. The value of this class is the professor’s guidance to find knowledge, learn how to approach investment decisions by thinking independently, and come up with your own recommendations rather than following everyone else’s,” she says. “It makes the course a unique experience for each student.”

And that unique experience comes at a very unique time.

“Although the pandemic has been challenging and devastating, I do feel lucky to be able to learn about investments and markets through this turmoil,” Saeed notes. “I learned how to value companies in regular times and what elements to look for during the pandemic and elections. Some companies flourished while others did not, but the one important thing that the pandemic has done to businesses is to highlight what was already there. If a company was fundamentally strong, it wasn’t as badly affected as others with a track record of bad business decisions.”

As students have watched how businesses adapted, they too have changed throughout the course.

“Before taking this class, I was generally indecisive and hesitant to give a business opinion in many instances,” says Saeed. “The hands-on approach helped me grow by learning what to look for and how to weigh different factors that affect any business or industry. I benefited a lot from the diverse perspectives of my classmates and how they approached the different businesses and industries they were analyzing.”

Dan Haines, co-founder and advisor at SummitView Advisors, serves as the instructor for the course, and enjoys seeing students dig into the course concepts.

“There is no answer to look up in a book, and picking winning stocks consistently is not easy,” says Haines, who guides students in their research on large-cap U.S. companies. “The class forces students to come up with their own investment thesis. Pulling from accounting, economics, business strategy, statistics and communications, students craft a persuasive recommendation and eventually pitch to seasoned business professionals. It is very rewarding to share my passion for this work with the students.”

And the fund has grown from $500,000 in 2008 to $2.3 million near the end of fall semester. Over the last five years, the fund has outperformed the S&P 500 Index by 1.7% annually. For the students, the return on investment goes well beyond these metrics.