INSIGHT ON: Higher Education – Student savvy

Real world pressures net endowment growth for UWO fund

Paul Wojahn knows a bit about pressure.

As a member of Oshkosh West’s powerhouse basketball teams earlier this decade, he’s been in pressure-packed situations where every possession, every shot and every decision could swing the outcome between a win and a loss.

Despite that experience, he readily admits he wasn’t fully prepared for the pressure he felt as one of the analysts making investment decisions on behalf of the Student-Managed Endowment Fund for the University of Wisconsin-Oshkosh. It was no longer just a game, but each investment opportunity he recommended could earn or cost the fund real dollars and affect real people.

“It was pretty sobering to realize that you could cost someone a scholarship,” says Wojahn, now a senior at UW-Oshkosh pursuing a degree in finance. “That’s about as real as you can make that experience.”

Still, he and his team members were up to the challenge. In 2013, assets for the SMEF fund at UW-Oshkosh surpassed more than $500,000 for the first time. Since its founding in 2000, earnings from the fund have been used to pay out more than $41,000 in scholarships for UW-Oshkosh students, and an additional $34,000 to university-related organizations.

The fund began humbly enough in 2000, with an initial endowment of $25,000. Wojahn and the team of students who work as analysts and fund managers recently reported their results to the UW-Oshkosh community, explaining to faculty and investors the moves they had made, and how they planned to balance opportunities for growth with the need to preserve the funds gained for future investments.

“I don’t know how much more relevant you can get,” says William J. Tallon, dean of the College of Business. “This is a clear example of where the classroom and the real world intersect. These are real dollars and real returns.”

And certainly, real risks.

A group of 13 students act as managers and analysts for the fund. While it is a for-credit class at UW-Oshkosh, students must apply and be accepted to the class, which is advised by experienced faculty members. The students work in the “trading room” in Sage Hall, which includes many of the same tools and technologies – real time market and news feeds – that professional investors use.

Students working as analysts track various sectors, such as energy or utilities, make recommendations to the team, and if the team agrees, they make the investment within the guidelines established for the fund. There are limits on how much can be invested, and the funds are constantly rebalanced to protect against relying on a particular stock.

“Some of those discussions can get pretty heated,” says Marion Rothkegel, a postgraduate student from Hildesheim, Germany, majoring in finance.

The SMEF is now composed of seven funds and includes contributors such as Thrivent Financial for Lutherans, Wisconsin Family Business Forum, and several family foundations. For example, the Hillenbrand Fund is a large-cap value fund endowed by the Anne Hillenbrand Foundation with the objective of long-term capital appreciation from investing in the common stock of large companies.

Some of the endowment’s holdings include familiar names such as Microsoft, Johnson Controls and the Walt Disney Company.

Not every recommendation gets the nod for an investment. At least once this semester, some of the student analysts looked to capitalize on the recent market run-up by recommending some higher performing – and more risky – investments. Unable to convince the group, the opportunity passed.

“I think we all realize this is a long-term strategy,” Wojahn says about the guidelines the students use to evaluate and recommend investments. “We are not looking to time the market here. We are looking to grow.”

For his part, Wojahn made a recommendation to invest in Dr Pepper Snapple Group, which would report earnings growth of 3.9 percent in the first quarter, as well as profits of $106 million. The beverage group has been a consistent performer for much of the past year, showing steady growth for most of that time.

Of the six funds that now comprise the endowment, five of them performed better than the composite benchmarks used to measure success. Classroom or not, those are results the students and faculty involved expect will give those who work on the SMEF a mark of distinction that employers will notice after graduation.

“It’s pretty valuable experience for post-school employment,” says Rothkegel, who at the time of the results presentation had secured a full-time position with an international firm. Others involved say they have had several interviews and conversations, but no firm offers yet.

“I have been getting a lot of contacts through LinkedIn, so I’m hopeful that activity will pick up soon,” says Wojahn.

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