Student Investment Fund surpasses $5 million mark

October 1, 2020

For the first time in its 12-year history, the real-world investment fund managed by undergraduate and graduate finance students in the College of Business broke the $5 million mark. The Student Investment Fund (SIF) closed on Sept. 2 with a total value of $5,038,175. The fund had hit a low this year of $3,291,360 on March 23, which works out to a +53% return over the 163 days prior to the new record.

“Like investors everywhere, FSU students had to grapple with the sudden downturn in the market earlier this year due to the global pandemic, then manage the fund well as the stock market experienced rapid recovery and rise,” said Steven Perfect, associate professor of finance, a certified financial analyst and the SIF faculty adviser.

The SIF started in 2008 with a $1.2 million investment from private donations and generous investments from the Florida State Foundation. In all, the foundation contributed $2 million in the base fund, an amount the students been able to more than double. Several members of the foundation’s board serve as directors on the SIF board. In 2013, the College of Business introduced a dedicated trading room that is used by the SIF’s student managers. “The fund has benefited from the strong performance of the overall market,” Perfect said. “But we also were well-positioned in a number of high-performing technology stocks like Apple, Amazon, Facebook and Microsoft.”

The SIF was created to train finance students how to actively manage an investment portfolio. Ideally, the SIF enriches student education through active participation in financial decision-making and financial markets.

Students perform security research, pitch stocks, make buy/sell decisions and develop routine reports on fund performance. The student managers are fully responsible for the day-to-day management of the portfolio, thus gaining hands-on money management experience. They learn to deal with the uncertainty inherent in the process of estimating stock value and contrasting it to stock price. The process helps them develop their financial intuition and provides an arena for practical application of investment decisions.

Approximately 85 percent of the fund is equity investments, and the remainder is invested in fixed income securities or cash. These percentages often change, however, as the specific asset allocation at any given time is an active investment choice made by the fund’s student managers. “The SIF is an invaluable tool for preparing students for the complex and challenging world of finance and a great example of why our college is recognized as one of the preeminent business schools in the nation,” said Michael Hartline, the college’s dean.