Academic journal article Journal of Financial Education

Expanding Management in Student Managed Investment Funds

Academic journal article Journal of Financial Education

Expanding Management in Student Managed Investment Funds

Article excerpt


The benefits of experiential education programs as part of a college curriculum are documented by a number of studies (for example, see Houde, 2007; Kolb and Kolb, 2005; Kayes and Kayes, 2003; Gagnon and Witt-Smith, 2001; LaForge and Busing, 1998; Gagnon, 1988; McKeachie, 1974; and Dewey, 1938). Key benefits from experiential education compared to more traditional classroom structures include a higher level of student involvement, development of lifelong learning skills, and a deeper educational experience leading to longer-term retention. Burkhalter and Schaer (1985) provide evidence that experiential education programs help students better prepare for professional careers. Research also shows that experiential education helps students develop communication skills, make better career decisions, and improve job-market prospects (for example, see Carter and Thomas, 1986; Knaper and Cropley, 1985; and Schiller and Hanks, 1984).

Student Managed Investment Funds (hereafter, noted as SMIFs) are a popular form of experiential education in many business schools. Students manage real money under supervision from some combination of faculty and practitioner advisory boards. SMIF programs must balance the goal of "learning by doing" from independent decisions by students with the traditional goal of generating the highest possible risk adjusted return. The balance of these two goals varies by program.

In this paper, we present a SMIF structure tilted aggressively toward overall student learning as the primary objective of the fund. Our structure expands the learning objectives beyond competent application of finance principles to include higher levels of student management for all operational decisions. The roles of faculty and advisory boards are limited to oversight within set parameters defined in the fund's Investment Policy Statement.1 Student managers are responsible for a full range of decisions on personnel, operations, stakeholder management, and investments. Students must provide adequate reporting, analysis, and explanations for all decisions on an ongoing basis, but student decisions stand unless a policy or protocol is violated. The program is unique for its breadth of student responsibilities and emphasis on goals beyond financial performance.


Lawrence (1994) outlines the early history of SMIFs starting with the Gannon University fund in 1952. In a more recent survey Lawrence (2008) finds that over 314 universities manage more than $407 million of assets. In response to the rapid growth and continued interest in SMIF programs, finance faculty formed the Association of Student Managed Investment Programs to allow a dialogue on SMIF issues and innovations.2 Faculty regularly share experiences with SMIF programs at academic conferences and in published research. The popular press also recognizes the unique experiential learning opportunities offered by SMIFs (for example see articles by Elmerraji, 2012; Trejos, 2008; Opdyke, 1998; Ruth, 1997; Rose, 1997; and Siwolop, 1996). Many employers now actively seek students who have fund management experience in their educational program/

A number of papers address the wide range of approaches that have been used to implement a SMIF program. For example, Kahl (1998) and Cox and Goff (1996) present organizational structures for SMIF programs. Dolan and Stevens (2010) introduce a unique top-down SMIF structure based on a coordinated blend of finance and economics students. Johnson, Alexander, and Allen (1996) compare a group decision-making process using an electronic meeting format with a more traditional face-to-face group meeting. Dewally and Krause (2009) present a student managed investment club program based on investing with Exchange Traded Funds. While there are many different fund structures, survey findings by Neely and Cooley (2004) indicate that faculty members provide much of the organizational structure for student funds, select student managers, and either participate or influence the decisions. …

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