When John Pletz began his job last fall as a financial advisor at Merrill Lynch, he was a fresh UT graduate. He also was already an experienced money manager.
As participants in the UT Student Managed Portfolio (SMP) program, finance students like Mr. Pletz learn all facets of the investment business. They also invest real money for a real client: $1 million of the UT Foundation’s $135 million portfolio.
The two-semester course, now in its third year, teaches fundamentals along with the independence and responsibility of real world investing, notes Gene Collins, Executive-in-Residence for UT’s College of Business Administration. Mr. Collins, who graduated from UT with a bachelor’s degree in 1968 and a master’s degree in 1971—both in economics—knows a bit about investing. He’s the retired managing director of Citigroup Asset Management and its affiliates, Salomon Brothers and Travelers.
The focus of the SMP, he said, is teaching students the entire investment process, not simply trading. “We teach them investment analysis, investment models and stock screening,” he said. In addition, documents required for any true investor, such as an investment policy, compliance statement, compliance review and transaction order flow, are required of the student investors. “The class is structured just as any external money manager would function,” he explained.
As part of their charge as a “large cap value” manager for the Foundation, students are required to do a written report and then present to the Foundation’s investment committee twice a year.
Instructor Linda Bowyer said this “real world component” is what particularly distinguishes it from other classes. “Traditional investment classes often have a trading simulation component, in which students are given play money to trade,” said Dr. Bowyer. “While this is a useful educational experience, it’s not the same as investing real money on behalf of a real client. Having to justify your investment decisions to a client, especially in a bear market, is a very different experience than having lost pretend money.”
“Presenting to the UTF board on two different occasions was an exhilarating and invaluable experience that few students ever get to undergo,” agreed Mr. Pletz.
He said the investment experience also “made a definite difference in job opportunities.”
Steven Plummer, who will graduate in spring with a bachelor’s degree in finance, said the course has been beneficial both educationally and career-wise. “We gained experience with various investment research services and software used by analysts and portfolio managers. Being proficient on Bloomberg, prior to graduation, looks good to potential employers.”
He said the experience helped set him apart from other candidates for his new job with Monroe Bank and Trust. “They had students apply from many other colleges, and they were impressed by The University of Toledo students the most. My experience with the SMP put me ahead of the pack.”
Mr. Collins said the students succeeded in outperforming the S&P 500 Index the last two years. This year, however, has been a difficult one for the student investors, as it has been for most professional investment managers.
Even amidst the pain of investment losses, however, the year was a valuable one for its participants. “We witnessed the fact that markets do not always go in a positive direction,” said Mr. Plummer. “Experiencing that first-hand gave us all a lesson in risk management that we will take with us into the future.”