What’s a surefire indicator that hedge funds are on the rise? Take a look at their presence on college campuses.
From Cornell, whose student-run hedge fund beat Wall Street returns to the University of Michigan, which allows its students to manage as much as $250,000, student hedge fund are becoming a more prominent part of financial education.
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Their success has attracted the attention of Wayne State University in Detroit, Michigan, which is in the process of launching its own student hedge fund within the school’s Financial Management Association.
“We thought this would be a great opportunity not only to bring together students but to practice what we learned in the classroom and just experiment with our ideas of investments and getting familiar with the markets,” Olta Sota, one of the students in charge of the FMA and the new student hedge fund, told StreetID. “This semester we went from having just a few members to having 30 active members and about 70 registered members that have expressed interest in the organization.”
“First we wanted to grow a strong background of financial students here at Wayne State,” Tyler Haksluoto, another student in charge of the fund, told StreetID. “Secondly, our long-term goal was to first create a Bloomberg Terminal or a trading platform. We realized that after we toured the University of Michigan and Dayton University…that these were skills we would like to learn in school and be able to practice and create a better understanding of the financial world without having to go to, say, a potential employer without that experience and background.”
Soon they hope to run a student portfolio to show off their progress.
“We’d like to create newsletters, send them out monthly, quarterly and yearly reports to show potential employers that what we’re learning in the classroom is [translating] to real-life experience,” said Haksluoto. “It’s kind of a learning experience. In addition, we want to make it kind of run like a corporation in that we have specific guidelines and orders that we’re going to continuously follow, so there’s no question — it’s not gonna be informal. It’s going to be a very formal setting, creating this fund and managing the money.”
Haksluoto said that regardless of how big the fund grows, the students want to keep it manageable in order to maintain control. They do not want another money manager to be forced to step in and manage it for them.
“We want it to be our money,” he said. “We want to grow it. Additionally, after we create this account and successfully trade, we’d like for it to be a source of scholarships for FMA and the financial department — kind of a source of a mini endowment fund for finance students.”
Citrin Group’s Jonathan Citrin has been “one of the key players” in helping the students understand the process of launching a hedge fund, Haksluoto said.
“Currently we’re creating [a] have a full document that explains our strategy, our asset allocation, the models that we plan on following, the order in which all trades will be placed, and have a formal document that we can send out to potential donors to have them look at and say, ‘They have a straight idea, they have a consistent strategy that they’re following,'” said Haksluoto. “And it’s not just a guessing game for the students.
We’re using our knowledge and research to base all of our decisions on.”
“The way we thought of it is, let our students first do the research,” Sota added. “While they do that research, kind of benchmark their findings toward the ones that are available outside, such as other universities.”