Betting big on business students during COVID-19 pandemic
MSU Denver turned over investment funds to students for an innovative new finance class. Then the economy was rocked by the pandemic. Here’s how they beat the market while learning about portfolio management.
The COVID-19 pandemic in early March halted a historic stock market rally and ushered in a period of unheralded market turbulence.
It was a difficult period for experienced portfolio managers, let alone business students learning to navigate the markets. Yet, this spring, the Metropolitan State University of Denver Foundation turned over to finance students control of $100,000 in University assets for an Advanced Investment Management course, the first of its kind at MSU Denver.
Despite the market volatility, the student-managed portfolios performed closely to their benchmark funds for the period starting in February, when the funds were handed over, through late April, when the academic semester wrapped. Through the summer, several students continued to meet once a week remotely to manage the funds, and as the market rebounded the portfolios by mid-July were up 1%, some 5% better than the relevant indices they used for comparison, which were down 4% overall.
The goal for the class was to expose students to the world of investment management and, more broadly, to the world of financial services, said finance lecturer Adam Schor.
“The performance over the first two months is pleasing but not the important story,” he said. “We have laid a foundation for a course that will benefit the University, the foundation, alumni, employers and, most important, the students who participate.”
In partnership with the MSU Denver Foundation, the nonprofit that administers the University’s endowment portfolio, students set up funds in two groups, working within each group – first in person, then remotely – to develop an investment philosophy, choose stocks and review holdings.
“This course required us to do research and come prepared to debate and defend our position on why something would make a good addition to our portfolio,” said finance major Elijah Black. “It was important to do the research because we were dealing with real funds in this project and not a portfolio filled with fake money.”
“The need to research and create financial statements to analyze individual companies is an unbelievably valuable asset that I will use for years to come,” said student Cody Boll.
While the markets were difficult in the spring, Schor said, the course was a big success, both for graduating seniors like Black and Boll and for what it means for future students taking the course.
“The students have added value to the endowment in absolute and relative terms,” Schor said. “Of course, the endowment has added great value to the students by sponsoring this course.”