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Student investors are beating the financial markets and improving their career prospects

YPSILANTI — Beating the S&P 500 is a pipe dream for many mutual fund managers.

According to Bloomberg, only 35 percent of fund managers have achieved an annual investment return that outperforms the performance of the Standard & Poor’s 500 Index in any calendar year since 2007. Beating the market is all the more difficult these days due to factors such as inflation, rising interest rates, an ongoing war and the looming specter of a possible recession.

Despite the dire odds, the Eagle Investment Fund (EIF), a student-managed mutual fund overseen by the faculty at Eastern College of Business, has outperformed the S&P 500 by 1.63 percent since last April. In addition, over the same period, the EIF outperformed the All Country World Index (ACWI) – a major global equity index that includes international stocks – by 4.40 percent.

“Beating established benchmarks like these is very difficult, especially at a time when markets are declining and we seem to be on the verge of a recession,” says Ivan Rodriguez, EMU Assistant Professor of Finance and EIF Faculty Advisor.

From the launch of the EIF in March 2019 to January 2022, it returned 9.99%. What makes the fund successful? Hard work, solid application of learned concepts and strong mentorship.

Yu Zhang, EMU professor of finance and EIF faculty advisor alongside Rodriguez, says the fund has two main goals.

“Give students interested in careers in financial investing hands-on experience managing a portfolio,” she says. “Second, developing the students’ professional skills by writing and presenting an end-of-year report to their external advisory group. It’s a big thing that the students and advisory board take very seriously.”

The skills students develop can also be translated into internships and potential jobs.

“Two EIF members have already found a job with a local investment company,” says Rodriguez.

Currently the EIF team consists of 11 undergraduates and five PhD students. Most have accounting or finance degrees from colleges of business. To join, students go through a competitive application and interview process. Students can earn up to three credit hours for a one-year tenure as a fund manager.

At weekly EIF meetings, team members discuss the performance of their holdings and develop investment policies and strategies. Currently, the fund has 40 to 50 stocks from companies like Berkshire Hathaway, Inc., Lockheed Martin, Microsoft, Adobe, and others.

In addition to feedback from faculty advisors, the advisory board – consisting of four experienced fund managers (including three EWU alumni) – offers professional advice.

“The members of the advisory board work in this area every day and are in the best position to provide insights into current financial trends,” says Zhang. “They also share information about what the industry expects from applicants.”

Vincent Hayes, an MBA student from the East, has already benefited from his experience as the EIF’s senior portfolio manager. In September 2021, he was hired as a financial analyst at PFM, a Philadelphia-based financial services company serving public entities such as local governments and school districts.

“My involvement with the fund has been one of the most intellectually stimulating exercises of my life,” says Hayes. “Thinking critically about what makes companies successful, what might be obstacles, what are relative risks and strengths – everything you learn is cumulative and constantly informs your next step as a fund manager.

“The Advisory Board is also invaluable. Our stock selection presentations to you are real sales pitches. At one of our meetings, an adviser said he could see that we had thought very critically about our selection. He said he would let us administer an SMA [separately managed account] at the moment. These comments really mean a lot to us.”

Kenneth Lord, Dean of EMU’s College of Business, says the EIF’s success is not surprising. The fund also attracts prospective students.

“The EIF student managers produce quality work and use a very sophisticated approach to setting their assignments,” says Lord. “Of course there will be ebb and flow in the market. Not every quarter is a winner. But they consistently meet or exceed market benchmarks.

“Whenever I meet with prospective students and their parents, I always mention the Eagle Investment Fund. It creates an additional opportunity for students to apply their education at a very high level. Participation is a huge plus for them when entering the job market.”

The EIF started with $100,000 in “fiat money” or virtual dollars for use in an AmeriTrade account. Since demonstrating a successful track record of investments, donors have provided the EIF with $110,000 ($60,000 from the College of Business and $50,000 from the EMU Foundation) for future use in a live brokerage account. Proceeds could help students pay for conference fees as well as college of business or other university initiatives.

“In October, EIF students attended the 9th Annual Student Managed Investment Fund Consortium Conference in Chicago,” says Zhang. “Not only did they come third in the company analysis competition, they also met with industry professionals and learned about their careers. These experiences are invaluable when it comes to helping students make their own career choices.”

Visit the Eagle Investment Fund website to find out more about the fund, how to join the EIF team and become a benefactor of the fund.

About Eastern Michigan University
Founded in 1849, Eastern is the second oldest public university in Michigan. It currently serves more than 14,000 students pursuing bachelor’s, master’s, professional, doctoral and certificate degrees in the arts, sciences and trades. In all, more than 300 majors, minors, and concentrations are offered by the University’s Colleges of Arts and Sciences; Business; Education; engineering and technology; health and social services; and its graduate school. National publications regularly recognize EMU for its excellence, diversity and commitment to applied education. Visit the University’s Rankings and Points of Pride websites to learn more. For more information about Eastern Michigan University, visit the university’s website. To keep up to date with university news, activities and announcements, visit EMU Today.

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