The stakes are high when it comes to investing, but student investment groups at the McDonough School of Business find they are well worth the risk. The recent successes of these organizations would rival those of some of the United States’ most well-known wealth management firms.
Founded in 1997, the Georgetown University Student Investment Fund (GUSIF) is Georgetown University’s largest entirely undergraduate student-run investment fund, managing more than $600,000 on behalf of the endowment and Georgetown University Alumni Association (GUAA). It started with a $100,000 investment from the university.
In 2000, GUAA contributed another $100,000 to GUSIF. Since then, the club has doubled GUAA's initial investment. GUAA's current portfolio is valued at more than $206,000.
GUSIF CEO Ben Stern (B’18) notes that the organization has two primary goals: to deliver above-market returns and to educate its 80 members. It appears to be achieving both goals. Amidst an often-turbulent market since the fund’s inception, it has outperformed the Standard & Poor's (S&P) 500 with less volatility. The S&P 500 is the most common benchmark in the U.S. stock market.
“Alumni have been involved since day one, not only as investors but also as counselors,” said Mike Yaeger (B’03), chair of the Board of Governors Investment Subcommittee and a managing director at Goldman Sachs. “We have a dual mandate to be stewards of the capital to ensure positive returns and to serve as mentors to the students.”
GUSIF board members explain that one of the secrets to their success is their in-depth research. They closely evaluate the market and pursue companies that they determine are undervalued. They buy U.S. stocks in six industries, including technology, media, and telecom; consumer and retail; health care; industrials and natural resources; financials; and real estate, gaming, and lodging. They also have research and securities groups.
Graduate students have a similar resource in the Graduate Investment Fund (GIF). This 80-member fund was started in 2002 with $200,000 of alumni and endowment contributions and focuses on large cap companies.
Anuj Mukherjee (MBA’18), GIF’s vice president of trading and risk, explains that this is a diversified fund. It takes more concentrated bets than indexes, which can contain thousands of stocks. This strategy has worked for GIF; the fund was up 12.22 percent in 2016. Typically, GIF growth is slow, but steady.
“Clients don’t want whiplash,” Mukherjee says. “They want a slow climb up the hill rather than sprinting up and falling down.”
To gain real-world experience and prepare them for careers in business and finance, GUSIF and GIF board members deliver formal presentations quarterly to the GUAA Investment Subcommittee. They describe their investment process, portfolio results, as well as the market outlook, and secure feedback from the subcommittee.
GUSIF and GIF recently launched a speaker series, which has included Michael Mauboussin (C’86) and other prominent alumni. Yaeger explains that speakers present to the organizations on what they do, how they do it, and what students need to do to get jobs. For example, GIF arranged a hands-on program with Bloomberg to learn how to use the terminals and run analytics, with the goal of becoming Bloomberg-certified. The two organizations also collaborate to build their expertise and participate together in professional development events.
Aside from the educational opportunities, there are other benefits to participating in these investment clubs. GUSIF President and COO Brianna Crichton (B’18) notes that it’s a social outlet for her. “[Participation in] GUSIF has been an integral experience because of the ties I made here,” said Crichton. “We are a tight-knit community.”
GUSIF membership has resulted in significant job opportunities in the financial sphere. Last year, every GUSIF member with summer internships received offers for full-time jobs. Morgan Stanley alone gave five offers to Georgetown students – all GUSIF members.
For GUAA, these results are a source of pride, and Yaeger encourages alumni to step in and help. “GUSIF and GIF have impressed not only with their strong investment returns but also their dedication to gain professional experience and employment,” said Yaeger. “The Georgetown community is deeply proud of the work of these student groups and encourages alumni to get involved in the mentoring, hiring, or engagement with these students.”
What’s next? Yaeger hopes that GUSIF and GIF members will expand their educational and networking opportunities by connecting with investment clubs at other universities, share best practices, and broaden their communities.
“What a powerful thing [for GUSIF and GIF members] to say that their Georgetown community helped them out,” Yaeger said.