Students to manage $4 million for Virginia Tech Foundation through new bond fund
On October 1, 14 students at Virginia Tech’s Pamplin College of Business will begin operating a new investment fund to manage $4 million of Virginia Tech Foundation monies through investments in bonds and other fixed-income securities.
The new program brings to about $8 million the total that Pamplin students will be managing for the Virginia Tech Foundation in two separate portfolios, based on stocks or bonds. Virginia Tech is the only Virginia school and one of only five universities in the country with a student-run fixed-income securities fund.
The new, fixed-income fund, called BASIS — Bond And Securities Investing by Students — “is an exciting opportunity to replicate in the debt markets the kind of hands-on learning experience that already exists for our students in the equity markets,” said George Morgan, the SunTrust Professor of Finance and faculty advisor of the group. The stock-investing program, SEED — Student-managed Endowment for Educational Development — was established in 1993. Its current $4-million portfolio is believed to be the nation’s largest student-run stock fund that is managed entirely as an extracurricular activity.
With BASIS, Morgan said, “we’re expanding the opportunities for our students to use the same technology as the professionals, to interact with industry leaders, and, most of all, to gain financial, leadership, and teamwork skills.”
Though student-run investment funds have been established at many universities around the country, Morgan said, very few focus on fixed-income securities — bonds and other instruments that provide periodic payments. Stock funds are more common, he said, partly due to stocks’ greater familiarity to individual investors, in contrast to the more institutional and complex nature of bond markets.
Pamplin’s finance faculty and members of the Virginia Tech Foundation, he said, felt it was important to give students an opportunity to get hands-on experience in fixed-income securities, due to the growing demand for professional expertise in this area. The department has received feedback from recruiters and graduates, Morgan said. “A large number of our graduates get jobs managing fixed-income securities, whether in New York, London, or Charlotte.” Debt markets, he said, are also larger than equity markets.
The students in BASIS, who are mostly undergraduates, will manage their portfolio through researching investments and executing trades. The focus, he said, will be on managing risk while getting the best possible return. The students will report to the foundation at least once a semester.
The launch of trading this fall culminates two-plus years of preparations. This past spring, BASIS students presented the final proposal requesting $4 million, which represents one percent of the university’s $400 million endowment. The foundation’s approval of the proposal, said John Cusimano, associate treasurer at the university’s investment and debt management office, “showed confidence in the finance department and its students, which certainly was bolstered by SEED’s success and recent investment performance.”
BASIS is currently seeking new members who are sophomores and juniors. Membership is open to any eligible Virginia Tech student. Members do not need to be finance or business majors, though most are. Candidates submit an application with a resumé and statement of interest and are chosen after submitting a bond analysis and company report and a formal interview with current members. Applicants with a sound academic track record, strong work ethic, and knowledge of investing are preferred.
Information sessions are scheduled for Wednesday, October 4 and Thursday, October 5 at 7 p.m., at a location to be determined. Please contact Matt Odhner, email@example.com, for more information. Odhner is a finance student who serves BASIS as a recruiter, public relations coordinator, and government sector analyst.
Virginia Tech’s nationally ranked Pamplin College of Business offers undergraduate and graduate programs in accounting and information systems, business information technology, economics, finance, hospitality and tourism management, management, and marketing. The college emphasizes the development of ethical values and leadership, technology, and international business skills. A member of its marketing faculty directs the interdisciplinary Sloan Foundation Forest Industries Center at Virginia Tech. The college’s other centers focus on business leadership, electronic commerce, and organizational performance. The college is committed to serving business and society through the expertise of its faculty, alumni, and students. It is named in honor of Robert B. Pamplin (BAD ’33), the former CEO of Georgia-Pacific, and his son, businessman and philanthropist Robert B. Pamplin Jr. (BAD ’64).