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Students Successfully Manage Real Investment Funds

CSULB SMIF - Multiple Teams Come together for a Group Shot

For the 22 students in Peter Ammermann’s Applied Portfolio Management class, there is a lot more at stake than a final grade. They are making investment decisions for actual portfolios worth over a quarter of a million dollars. In addition, they have to report back to university-related committees on the results and consequences of their decisions.

The vision of former Finance Department Chair Dick Runyon, the Student-Managed Investment Fund (SMIF) Program launched in 1994 as one of a few such programs throughout the country and the first in the CSU system to be approved by the Chancellor’s office.

The initial size of the portfolio was only $50,000. Concern about entrusting real money to students led to a number of restrictive risk-management requirements, including 10% stop-loss orders on each security purchased and liquidating the entire portfolio at the end of each academic year, which unfortunately meant that the portfolio could not be invested with a true long-term perspective.

Nonetheless, students were both careful with the investment decisions they made, and the scope of activities in which the SMIF students have been involved has steadily expanded while some of the tight constraints they originally faced have gradually been relaxed.

Beginning in 2004, CSULB’s SMIF program became the first to participate in the Annual Portfolio Management Request-for-Proposal (RFP) Competition in which student teams from local universities compete for the right to manage various portfolios overseen by the CFA Society of Orange County Foundation (CFAOCF). This program has since grown to include three other universities - CSUF, UCI, and Chapman University - and CSULB has come in either first or second place every year, earning the right to manage as much as another $100,000.

In 2011 SMIF students’ began managing a third portfolio on behalf of the 49er Shops. This portfolio started with $100,000 and has since grown to more than $140,000, a rate of growth that outpaced that achieved over the same time period by the professional portfolio managers who manage the remainder of the 49er Shops’ funds.

CSULB SMIF - with the Wall Street Bull

In addition to their portfolio management activities, the SMIF students have also begun traveling to and participating in the RISE Symposium at the University of Dayton (Ohio) and the Q-GAME Forum in New York City, two annual conferences for students in SMIF-type programs, which have become much more numerous and widely accepted over the intervening decades since SMIF was launched.

Research has always been a key component of the SMIF students’ activities, and, as an honors-type program, SMIF attracts some of the best and brightest of the students that have come to the College of Business Administration (CBA), a number of whom have also been participants in either the CBA or the CSULB Honors programs and have incorporated their work with SMIF into their research efforts.

  • CBA Honors student Brian Leip (SMIF AY2011) researched the efficacy of a wide variety of technical trading strategies for his honors thesis.
  • CSULB Honors student Voskan Elbakyan (SMIF AY2005) took it upon himself to compile and edit the annual report describing the activities, economic perspectives, and market overview for his year’s SMIF class and submitted this work to fulfill his honors thesis requirements.
  • More recently, CSULB Honors student Tyler Gilley (SMIF AY2014) conducted a thesis research project on the efficacy of various liquidity measures for improving the structuring of value- and momentum-oriented investment strategies.

But, it is not just Honors program students who have made notable research contributions.

CSULB SMIF - in the Classroom

One student, Reuben Conceicao (SMIF AY2009), stayed on an extra year as a research associate to develop an asset allocation and tactical equity selection strategy for SMIF (that, with some modifications, is still being utilized by today’s SMIF students). He was also a co-author of the paper describing this strategy that won second place in the Financial Education Association 2010 Conference Competitive Paper Award.

A few years later, a pair of SMIF students, Forest Zhang and Dimitar Dimitrov (SMIF AY2013), tried to modify and implement a method presented in a Financial Analysts Journal article in order to obtain better predictions of future market movements and thereby improve on Reuben’s strategy. Not only were they successful in their efforts, but their work (and their communications with the journal article’s authors) even led the authors to correct a mistake in their original source code and submit a new version to go along with the article.

Given all the educational benefits of SMIF and the continued drive and initiative shown by its students, we look forward to a successful third decade for the SMIF Program and its participants.

CSULB Student Managed Investment Fund | Research @ the Beach | Student Research