Nine Sacramento State students with a keen interest in finance are about to get some serious hands-on experience investing $250,000.
The finance majors have been selected to make investment decisions and monitor and report on the performance of the quarter-million dollar allocation of University Enterprise Inc.’s investment portfolio.
The Student Investment Management Program is a collaboration between Sac State’s College of Business Administration and UEI to provide students with direct experience in the world of Wall Street.
The proposal came from UEI Executive Director Jim Reinhart, whose experience with a similar program at Cal Poly San Luis Obispo convinced him of its intrinsic worth in preparing students for an increasingly competitive job market.
The program’s gestation began last spring and was fine-tuned during the summer. In September, a faculty committee chose nine students. All of them are finance majors with superior grade-point averages.
Professor Anna Vygodina, one of the program’s executive directors, says the students’ one-year commitment to the program is no problem because they are excited by the prospect of gaining valuable experience in their specialty. “All of them are highly motivated and eager to learn,” she says.
Sandra Gallo is a case in point. “This puts us in the big leagues,” she says, “and puts Sacramento State on the map.” She has been tracking the markets and reviewing reams of stock reports very carefully because the student investors will be handling “real money.”
Vladimir Petrosyan sees the fund as “an excellent opportunity for me to apply the knowledge that I have gained in my finance classes. Few colleges offer such an opportunity,” he says and predicts the fund “will raise the status of the College of Business Administration at Sacramento State to an entirely new level.”
College Business School Dean Sanjay Varshney is no less enthused about the program, adding that it will “prepare them for managing in the real world.” Consequently it will “allow our students to be even more valuable than ever to the financial community and employers.”
That point is punctuated by Brian Leu, an investment officer for the California Public Employees’ Retirement System, who considers the fund “a unique opportunity for students to apply theory learned in the classroom to real-life stock analysis and asset management. Not only will they get the chance to practice concepts in accounting, finance, business and strategy, but they will also gain exposure to the challenges of investing.”
Leu, who has volunteered as a professional advisor to the program, received his MBA at New York University Stern School of Business, where he helped manage a $2 million student investment fund. He will help monitor the students as they analyze stocks and make investment decisions.
The students presented the recommendations in November. Varshney says the objective is to secure “a total return in excess of 1 percent above the S&P 500,” noting that because of the risks involved there are no guarantees of a minimum return. This, he cautions, is “part of the learning process.”
There are safeguards, however. No single security may exceed 5 percent of the $250,000 portfolio. And while the students will have plenty of leeway in researching stocks and making recommended buys, two faculty advisors and two finance professionals will oversee the operation and provide guidance.
UEI will also provide an investment management fee to the program, and a portion of future investment earnings will go toward student scholarships.