What’s a surefire indicator that hedge funds are on the rise? Take a look at their presence on college campusesBy StreetID
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.
Their success has attracted the attention of Wayne State University in Detroit,
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 â€¦ 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 questionâ€”it’s not gonna
be informal. It’s going to be a very formal setting, creating this fund and managing the
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 departmentâ€”kind of a source of a mini endowment fund for
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.”
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