Student-Managed Investment Fund Outpaces Industry Yardstick

An investment portfolio managed by a group of Pennsylvania College of Technology business students has outperformed a key industry benchmark in its firstsix months of trading.

The college established the Student Managed Investment Fund with a portion of donations earmarked for educational purposes within the college's School of Business and Computer Technologies; student members acquired their initial holdings in December.

The student stock portfolio is up 9.27 percent (since the initiation of trades on Dec. 8 and after transaction costs) vs. the 7.27-percent increase of the Standard& Poor's 500 over the same period. The students achieved that return with a portfolio beta (risk measure) of only about 0.92, according to Roy A. Fletcher, assistant professor of business administration: banking and finance.

"Although courses at many colleges and universities simulate security selection and portfolio management using a variety of approaches with hypothetical dollars, business administration: banking and finance concentration students involved with the fund gain a real appreciation of the issues and pressures that come with investing," Fletcher said. "The experience brings a new dimension to the classroom experience as students must attempt to integrate all their business skills into a single decision to buy or sell a security, at what price, when and what quantity."

Fletcher, who has been involved with similar projects elsewhere, is faculty adviser to the Student Managed Investment Fund.

"I think that this is a wonderful learning experience, and I am honored to be a part of it," said Vincent M. Moughan, of Sayre, president of the fund's Board of Directors. "It gives students a better sense of responsibility when it comes to finance, because we are working with actual money instead of imaginary money that some student might have less interest in. I would like to thank … Penn College for making this possible and helping further the education of its students."

Other fund officers are Phillip H. Rose, Annville, vice president; Michelle L. Weaver, Williamsport, treasurer; Kristy D. Bachman, Kreamer, secretary; and Seth E. Martin, Palmyra, research analyst.

"The investment fund was the brainchild of Dr. Fletcher, and its success is a testament to his knowledge and hard work," Weaver said. "We are so thrilled that Penn College gave us this opportunity for hands-on experience in our field. We hope that, with continued success, future students will be able to manage a larger portion of the endowment fund."

Rose is majoring in business administration: management; the others all are business administration: banking and finance majors.

"We were pleased that we could help Dr. Fletcher make his innovative investment idea a reality for our banking and finance students," said Edward A. Henninger, dean of business and computer technologies. "The level of enthusiasm and seriousness with which the SMIF students have approached this real-life challenge is inspiring, and the early results speak for themselves."

Over Spring Break, Fletcher, some of the student board members and other interested students attended a seminar by William G. Droms of Georgetown University. Droms is the Powers Professor of Finance and also manages over $200 million in client assets, as well as serving on the investment committees of other institutions that control more than $2 billion.

"Penn College students did not go unnoticed by Dr. Droms, who commented during his initial remarks that, not in his 34 years of teaching at Georgetown did he see his students give up a portion of their Spring Break to attend a finance seminar on a Saturday morning," Fletcher said.

It is anticipated that, as the program evolves, members of the School of Business and Computer Technologies' Business Administration and Accounting advisory committees, distinguished business-administration alumni, and other interested and capable business leaders in the community will be asked to become involved, the professor added.

M&T Bank has provided trading and custodial services for the account, which has benefited from Annual Fund donations specifically designated for the School of Business and Computer Technologies.

For more information about business-related majors at Penn College, call (570) 327-4512, send e-mail to or visit online .