Whether it’s through popular investment app Robin Hood, cryptocurrencies, or some other medium, it seems that everyone has gotten involved with some form of investing these past few years.
But one Accounting and Financial Management class gives upperclassmen students the opportunity to get real investment and portfolio management experience – without risking their own personal savings.
The Student Managed Investment Fund (SMIF) is made up of two courses, ACFM 375 and 476, and allows students to manage $3.6 million in real University endowment funds. Applications for next year’s course closes on March 11.
“Successful candidates have learned many of the required technical skills in their accounting and finance courses, in SMIF our analysts apply those skills and learn some new ones,” explained Frank Schreiner, Co-Director of SMIF and Associate Professor of Managerial Practice. “They also learn to become comfortable with Wall Street jargon, which usually isn’t found in the textbooks.”
Open to students since 2000, the class is an application-only capstone for seniors and second-semester juniors to “apply their knowledge of portfolio management, asset allocation, accounting, economics, business strategy and statistics” and “ sharpen their negotiation, communications and leadership skills,” as written on the Accounting & Financial Management website.
Enrolled students participate in different committees — including PAR, Stakeholder Communications, Econ & Strategy, Fixed Income, Derivatives, Corporate Governance, Administration — and cover different economic sectors, such as Consumer Discretionary, Health Care, Consumer Staples, Materials, Financials, Energy, Communications, Utilities, Technology, Industrials and REITS (Real Estate Investment Trust).
Students are placed in committees based on their preferences and where the faculty advisors see them fit best.
Schreiner said that teamwork is an important aspect of the course because students need to collaborate with each other on pitching ideas.
The class works collaboratively on the portfolio benchmark, asset allocation and what securities they buy and sell throughout the first semester.
Then, in the second semester, students are responsible for creating investment theses, which are an in-depth macro and financial valuation of a new security to add to the portfolio.
Schreiner said that the day-to-day for students varies throughout the semester, but that the course moves fast.
“Over the course of the year, the analysts select and maintain a benchmark, an asset allocation, equity sector weights, as well as fixed income duration and credit quality. We discuss the economy, financial markets, and how we are performing relative to our benchmark [in] almost every class,” Schreiner said.
Each student makes their pitch to the class, the group discusses and often challenges the proposal, and they all vote on whether to approve the stock, which requires a 66 percent approval to pass. Schreiner and Curtis Nicholls, an additional faculty advisor to the program, actually execute the trades.
With COVID-19 increasing the volatility of international markets, Schreiner believes SMIF was able to teach students of the risks of investing.
“In addition to COVID-19, the students have managed the portfolio through a presidential election, a recession, inflation and now a major war in Europe. We hope that they also come to understand that risk, and the volatility that comes with it, often creates opportunity,” Schreiner said.
Tory Walworth ‘22, member of the Derivatives Committee covering Energy, spoke about her time with SMIF this year.
“SMIF is an incredibly hands-on experience… I’ve learned so much from this class and would highly recommend it to anyone interested in a career in financial services,” Walworth said.
Schriener wanted to emphasize that the funds for the program are part of the University’s endowment.
“Our primary goal is to provide SMIF students with a top-notch experiential learning program that teaches them exactly how institutional investing works,” Schreiner said. “The other important aspect of SMIF is that it is part of Bucknell’s endowment, which ultimately funds many things, including student financial aid. Our analysts learn that the availability of future student aid here is largely dependent on the investment returns of Bucknell’s endowment.”
“In other words, we can make a difference.”