Trinity’s Student Managed Fund Excels
Undergraduates are making smart stock investments and beating the market as a result

Anyone invested in the stock market will admit they want their money to make more money, but how can this complex skill be learned? At Trinity University, undergraduates in the Student Managed Fund (SMF) are not only learning how to invest, they are also mastering the process.

Students in the program manage more than $5 million of the University's endowment and consistently outperform the Standard & Poor’s 500 index. They have accomplished this feat on a one-year, three-year, and five-year basis as of December 2015. “To put this stellar performance in perspective, only 22 percent of U.S. mutual funds outperformed their respective benchmarks on a trailing five-year basis,” said T.J. Qatato, director of the SMF and a Chartered Financial Analyst (CFA.)

In addition to “beating the market,” the student managers also outperformed their Lipper mutual-fund peer group on a one-year, three-year, and five-year basis. Lipper is a global company that analyzes how funds perform for both large companies and mid-sized companies. The student managers have bested both categories with their investment decisions.

“It doesn’t get any better than that. That’s like a grand slam”, said Qatato, who has a 19-year investment background and began team-teaching the course in 2014 with L. Paige Fields, dean of the Trinity University School of Business. The following year, the SMF students voted to convert the course into a program that Qatato now leads and shares his experience.

Fields noted that the Trinity SMF is run exclusively by undergraduates and remains one of the few college-based funds to be truly student managed.

“Most funds, despite being named ‘student managed,’ have faculty or panels of experts who make final stock buy and sell decisions. Our faculty director has a single vote in the process as does each student manager,” Fields said.

In fact, the faculty director is empowered by SMF policies to veto any stock decision made by the students, but it has never happened.

“We’re proud to say we’ve never used the veto,” Qatato said. “Dr. Fields never used it, and I’ve never used it. That reflects well on the students’ own research and analysis.”

As part of the SMF program, Trinity students examine each company under consideration for a stock transaction in terms of its strength, weaknesses, opportunities, and threats – also known as a SWOT analysis. Managers present a recommendation to buy or sell a company’s stock or whether to trim or add to any existing holdings. And then a vote is taken on a course of action.

Qatato said the student managers “embrace their fiduciary responsibility to research stocks” and “really take it to heart.”

Students must apply to be part of the program, with the fall semester focusing on analyst tasks and the spring semester devoted to portfolio management. Such a structure provides students with a year’s worth of experience and provides them with a sense of what an investment job could be like after graduation. The program also offers field trips to investment banks and other industries where internships or jobs might be possible. In addition, students write three newsletters a semester to share their investment decisions with SMF alumni, faculty, and friends of the School of Business. A select group of students also present updates on the fund’s performance to the Trinity University Board of Trustees.  

“Students can market themselves as having almost one year of work as experience, given real time nature of the SMF program, and its curriculum, lectures, and decision making that they are all responsible for,” Qatato said. “The stock research reports, for example, are just like what a new grad would do as a new hire.”

Trinity Trustees in 1998 initially approved a plan for students to manage $500,000 in the University’s endowment. The first faculty director was Philip Cooley, who retired in 2012. Successful investing and additional Board allocations have pushed the portfolio past $5 million.

Also echoing the success of the student fund managers, particularly their ability to beat the S&P 500 and the Lipper index, was Richard Butler, professor emeritus of economics at Trinity. “In the investment business, the long-term look is indicative of how good you are. If your success is sustained, you didn’t just get lucky.”

Susie P. Gonzalez helped tell Trinity's story as part of the University communications team.

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