Profit, curiously, is not what defines a student-run investment portfolio for the University of Saskatchewan’s Edwards School of Business. Sure, to the delight of its student managers, the $775,000-plus fund outperformed a key stock market index in 2013. But, in running the fund, undergraduate commerce students earn course credits for demonstrated leadership, teamwork, research and communication skills – not for the rise and fall of stocks and bonds.
The two-semester course is designed to give students a taste of taking care of other people’s money, hopefully with responsibility and humility. “The best possible thing to happen to students is that they would lose money,” says Edwards finance professor George Tannous. “No student should think as a result of their brilliance they can consistently beat the market.”
He developed the course two years ago after retired investment banker George Dembroski donated $1 million to the business school, with $300,000 set aside for a student-managed portfolio trust. With an additional $200,000 from long-time school benefactor Murray Edwards, the fund got off the ground in 2011and now stands at $775,000 with donations from others.
More than 20 business schools now offer some exposure to investment trading through simulations, extra-curricular clubs or for-credit courses. Some schools restrict entry to their investment courses, but the Edwards School of Business encourages involvement from all interested business students (mostly in third and fourth year) who want to learn how to trade stocks and bonds with real money in real time.
“We made a decision we would like to expose the maximum number of people to the responsibility of managing the fund,” says school dean Daphne Taras. She serves on a governing board for the portfolio, which operates within strict investment guidelines. She says she’s impressed by the seriousness that students bring to their task of choosing investments for long-term return. “Their palms sweat, which is what you want,” she says.
Every week, Dr. Tannous’s class of 30 meets in small groups to analyze potential buy or sell recommendations that will be put to the entire class for a vote two days later. He evaluates students on the quality and persuasiveness of their presentations to peers, putting the class in charge of voting on a buy, sell or hold recommendation.
“You really have to do your research,” says fourth-year student Johny Maroghi. “The class grills you with questions and they do not make it easy.” He says the course has become a talking point in job interviews. “You handled actual money?” he says, citing the most frequently asked question by employers.
Dr. Tannous says his “big reward” as a teacher is watching the transformation of students by the end of the course. “They are more confident and look you in the eye,” he says. “They are not hesitant anymore.”