Globe and Mail: Real stock market experience teaches studentsFeb 14, 2014
The following is an excerpt from the full article published in The Globe and Mail on February 13, 2014.
BY JENNIFER LEWINGTON, GLOBE AND MAIL
At some Canadian business schools, students learn to manage other people’s money long before landing their first job.
They do so through a student-run investment fund, fast becoming a staple of business schools in either for-credit courses or extracurricular activities. Increasingly, these funds use real money (from donors), giving students real-life exposure to the discipline of trading stocks and bonds for a client.
Simon Fraser University’s Beedie School of Business in Burnaby, B.C., selects 18 or so undergraduates every year to manage a $5-million portfolio of Canadian equities, bonds and cash, which represents a portion of the university’s total endowment. The Beedie Endowment Asset Management Fund, named for the family that gave $5-million to open the fund in 2011, is believed to be the largest student-run fund in Canada.
As in a professional setting, students are expected to make research-based decisions, work in teams and report quarterly to an oversight body. The Beedie fund limits investments to a mix of 60 per cent Canadian equities and 40 per cent fixed income, with an additional requirement for diverse holdings of larger-sized Canadian companies.
As in real life, students learn that markets do not always go up.
“One of the most important things you can learn is that the market always humbles you,” says Connor Buss, a fourth-year student at Beedie and a member of the management fund team for two years. “You can be so certain and confident about something, but at the end of the day there is always a reason why something is priced the way it is.”
Beedie finance professor Peter Klein, faculty supervisor for the fund, says “the goal is to have as realistic an investment experience as we can possibly provide.” A former investment banker, he says student-run funds are a “newish phenomenon,” with the focus on equipping participants for a likely career in finance. “It’s good if we can give them an opportunity to apply some of that critical thinking in something that will be relevant to their employment.”
Mr. Buss says his fund experience paved the way to an internship last summer with a major Canadian bank in Vancouver. Later this year, he joins the same institution for a full-time job in investment banking in Toronto.