USC Students Beat Their Benchmarks With ADRs
The Center for Investment Studies at the University of Southern California's Marshall School of Business is tasked with preparing the school's graduates to make a serious impact in the professional world of business and finance. The center, founded in 2002 and currently headed by Professor Larry Harris, has positioned itself as a leader in financial analysis and valuation.
USC Marshall student groups at both the undergraduate and MBA levels are working on honing their investment knowledge and experience. This Investment Club Watch will take a look at how the MBA investment group manages real money and beats their
benchmarks.
The $4 Million SIF
The Student Investment Fund (SIF) is USC Marshall's crown jewel. The
fund puts MBA students in charge of a $4 million school endowment, the proceeds of which are used to fund student scholarships.
The SIF sets USC apart from its peer schools for a couple of reasons. According to Professor Harris, "We have more money under
student management, and the program is integrated into our curriculum."
The fund is managed by up to sixteen student
managers who are handpicked to work in the fund. What does Harris look for in a student fund manager? He says, "We're looking for highly motivated, committed students who show a strong interest in investment management, and whom we believe could benefit substantially from the program."
The Student Investment Fund is comprised of four funds: the Provident
Growth Fund (a
mid-cap
growth fund), the Trojan Equity Fund (a long term
value fund), the Babcock California Fund (a
small-cap fund, half of which is composed of California-based companies), and the Marshall Fixed-Income Fund (a
TheStreet Recommends
fixed-income portfolio that includes
U.S. Treasury
notes and various types of
bonds).
The SIF's Provident and Trojan Funds
Mark Dombrowski, a manager of the Provident Growth Fund, says that he's "pleased" with the fund's performance since his team took it over in April. Dombrowski says, "We are up around 17% since April and we are beating our benchmarks
the previous portfolio and the
S&P Midcap Growth
Index by over 6%."
This upbeat sentiment was echoed by Kerrisha Jenkins, a manager of the Trojan Equity Fund. Jenkins says: "We have managed to exceed our benchmark
the S&P 500 Value Index by a significant margin in large part by executing a tactical
allocation strategy that significantly reduced our exposure to financials from May through September of this year. We chose to 'lock in' these gains relative to our benchmark, by purchasing international banks
like
Lloyds TSB Group
with limited subprime credit exposure to more closely track benchmark sector allocations and further benefit from our expectation of a continuing decline in the dollar versus the Euro."
You can also see the Trojan Equity Fund's international theme at play in four of the equity fund's top five performing holdings:
- PetroChina ( ADR) (PTR) - Get PetroChina Company Limited Report
- GameStop (GME) - Get GameStop Corporation Report
- BHP Billiton (BHP) - Get BHP Group Limited American Depositary Shares (Each representing two) Report
- Nokia (ADR) (NOK) - Get Nokia Corporation Sponsored American Depositary Shares Report
- Vodafone (ADR) (VOD) - Get Vodafone Group Plc Report
USC's fast-paced MBA-run investment fund is certainly making the Marshall school a dynamic place to start a financial career. But enrolling in business school is not your only option to get a rigorous hands-on education in investing. Eric Ward, a student manager of the Trojan Equity Fund, has a few suggestions for young people trying to break into the investing world -- whether as full-time industry pros or self-directed individual investors. Ward says: "Join or start an investment group that manages either real or 'paper' money and try to run it as you would a real investment fund. Set mandates on investment criteria and understand each stock in your portfolio.
That way, you will learn a lot about the markets, the economy, and the potential emotions that come into play."
Afterwards, Ward advises to "get out and start meeting people in the industry." He says, "You will have a lot more to talk about
with professionals if you have had a couple months under your belt
of managing your
group fund
and
have learned from the experience."
Jonas Elmerraji is the founder and publisher of Growfolio.com, an online business magazine for young investors.
