Students’ investment fund success pays off

by Christi Mathis

CARBONDALE, Ill. — Success is creating opportunity for the students who manage the Saluki Student Investment Fund.

Modeled after a real investment management firm, the Saluki Student Investment Fund (SSIF) is a Registered Student Organization at Southern Illinois University Carbondale with more than a decade of success investing funds for the Southern Illinois University Foundation. The SSIF Foundation portfolio, originally totaling $200,000, has grown to about $370,000 since May 2000. In recognition of that success, the foundation recently increased the SSIF management account total to $1 million.

“The SIU Foundation’s investment committee is clearly pleased with the performance exhibited by these young people,” said Rickey N. McCurry, vice chancellor for institutional advancement and chief executive officer of the SIU Foundation. “We’re excited to offer this opportunity to our students. SSIF is a pleasure to work with and we look forward to continuing this relationship well into the future.”

Students in SSIF select stocks and fund investments, study results and make presentations regarding their performance. It gives them real-world portfolio management and investment research experience, coupled with the opportunity to improve their written and oral communications skills. The goal is maximizing long-term investment results.

Shannon Daily, a finance major from Herrin, and Brad Bell, a finance/mathematics double major from Cobden, are both members of SSIF and say working with the group has been an invaluable experience.

Bell joined SSIF in fall 2010, initially just to get involved in a student activity and due to his interest in stocks and finance. But he said the choice “has been one of the best decisions I have made as an undergraduate. I learned how to apply the valuation models and finance techniques introduced in classes. My belief is that one doesn’t get true understanding without application and the SSIF is a forum for undergraduates to do that.”

Daily joined the team in January and said it is a professional organization of students who take their responsibility to their clients very seriously. She appreciates that SSIF provides “an experiential learning environment for the application of classroom knowledge” and she said she’s thankful the SIU Foundation gives SIUC students “this incredible opportunity.”

“During the last semester, I learned how to do a cash flow valuation. I also had the opportunity to participate in the presentation for the SIU Foundation, which allowed me to learn how asset managers present to their clients. The feedback the group received was nothing but positive. I was also one of the students who went to Dayton, Ohio, for R.I.S.E. XI, a forum for students to be able to interact and learn from professionals, and while there I learned how to operate trading software with real time market data and I gained incredible insight about what investment banking is like for professionals. Participating in SSIF has made me a more competitive candidate for the careers I’m interested in, especially investment banking. I am more confident in my ability to perform the job functions expected from me. Within the next year and a half, I know I will be prepared for whatever career I choose because of the things I have and will have learned from SSIF, the fantastic finance department and Dr. (Jason) Greene,” Daily said.

Bell agreed, saying his work with SSIF has been “extremely beneficial to my development.” He calls the organization an excellent “training ground for undergraduates moving out into the professional world. We do all of the things that an institutional asset manager does, all while attending classes. We learn a lot about all the things you have to do to keep an organization ticking and communicating well and also about the accountability necessary to work at a high-level organization. These are skills that are transferable to many different disciplines. The SSIF is a great group in that we hold each other to high standards and I think we all take pride in representing SIUC in a professional manner.”

Omar and Carol Winter, both SIUC alumni, provided a $25,000 gift to launch the student investment fund in May 2000. Shortly thereafter, the SIU Foundation essentially “hired” SSIF as one of its portfolio managers, investing $200,000 for the students to manage, according to Jason Greene, associate professor of finance and faculty adviser for SSIF.

“The goal of Mr. and Mrs. Winter and the SIU Foundation was to provide SIUC undergraduate students with hands-on experience in portfolio management and investment research,” Greene said. He said the students focus the foundation’s portfolio on U.S. Mid Cap stocks, those from publicly traded U.S. companies valued at about $2 billion-$6 billion.

“This portfolio is a part of the general endowment, with gains and income benefitting the general endowment fund. As of the end of the spring 2011 semester, the portfolio had grown from its original $200,000 to approximately $370,000, reflecting a return of approximately 6.3 percent per year. Over the past seven years in particular, the fund has performed very well, outperforming its benchmark by more than one percent per year,” Greene said.

About 100 students participated with SSIF during its first decade with Professor Mark Peterson as faculty adviser. When Peterson became chair of the finance department in summer 2010, Greene stepped into the adviser post, bringing with him years of investment experience. Prior to his arrival in 2009 at SIUC, Greene was an executive with an investment management firm executive that managed about $60 billion on behalf of institutional clients including public pension funds and university endowments.

SSIF is open to all undergraduate students, regardless of their major. Membership continues to grow and is now averaging about 20 students per semester, with the majority coming from the College of Business.

“These students have shown a great deal of professionalism in diligently working to do the best job possible in managing the foundation’s money. The students focus on making the best investments possible on behalf of their client. Their investment philosophy is to capitalize on investment opportunities through focused research. They believe that their competitive advantage is their unique and unbiased perspective as students who can spot trends in the markets, especially those that are driven by or favored by their generation,” Greene said.

Each student is a member of a team focusing its research on companies within a specific sector. Sectors include technology, finance, healthcare and more. The goal of the team is to choose within each sector the companies representing the best opportunity for the investment to perform well. Greene said the experience requires students to put their classroom lessons to the test within a professional environment while learning to collaborate and take responsibility for their analysis and investment decisions.

The SIU Foundation’s Investment Committee sets high standards, which in turn inspires the students to achieve great results in both the portfolio’s performance and in their SIUC educational experience, Greene said. He noted that the students worked very hard to earn the confidence of the committee and the foundation to secure the substantial boost in the SSIF’s SIU Foundation portfolio.

“The SIU Foundation Board and the Investment Committee thereof are very proud of the SSIF, the students and their advisers, Dr. Peterson and Dr. Greene. It has been a very exciting and rewarding experience for us as board members to observe the hard work and dedication of each student and to realize how important this learning tool is to them and their futures. To listen and watch the students make their reports to the Investment Committee and to see their dedication and excitement makes us feel that perhaps we are a part of their learning experience at SIU. Many of these students will become investment specialists and will help many people manage their investment portfolios,” said Roger Gray, chair of the SIU Foundation Investment Committee.

“Over the years, the Investment Committee itself has researched many money managers before employing them. We have to have a great deal of confidence in the SSIF to allow them to manage $1 million of the Foundation’s investments. The SSIF results compare well with other managers we employ and in some cases, exceed very large professional managers. We believe the SSIF, under the guidance of Dr. Jason Greene, will continue to grow and attract attention throughout the SIU community and the investing world,” said Gray.

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