George Mason University assistant professor Derek Horstmeyer has no problem trusting his finance students with a quarter-of-a-million dollars in the stock market. He’s been doing so since fall 2018 when the university’s first Student Managed Investment Fund began.
“It’s a really cool structure,” says Horstmeyer, who teaches in the School of Business . “We get some of the top students in the finance and business school and separate them into teams that follow a particular sector in the S&P 500.”
Offered as a course, FNAN 477 Student Managed Investment Fund , the experience leads to some healthy competition. At the end of the semester, the teams compete against each other and pitch how they’d like to change their group’s sector.
“Students are the ultimate decision-makers,” Horstmeyer says. They’re also in charge of conducting market research and analysis and ensuring the portfolio is well diversified.
The top students in each class also take charge as members of the portfolio’s risk and investment committees. These students supervise the portfolio on a day-to-day basis—which means students are studying the market outside of class, too.
“[This class] has prepared me for a career in asset management unlike any other course I’ve taken at Mason,” says finance major Justin Boileu, who served as the president of the fund’s risk committee. “Learning every day outside of class, as well as the real-world experience the course presents, has not only made me a better student, but will also make me a more well-rounded professional.”
Finance major Myriam Cisse thinks similarly. “This class represents a bridge between the classroom and the experience needed for security analysis and portfolio construction. It is the best class to be ‘real-world’ ready.”
The driving force behind the class’s creation came from Trevor Montano, BS Accounting ’00, who has worked as a chief investment officer with the U.S. Department of the Treasury. He approached the school about creating the fund to give students actual experience with managing a portfolio. Initial portfolio funds came from the George Mason University Foundation Board of Trustees, and returns go back to the university endowment.
Students also benefit from hearing from local guest speakers and taking advantage of opportunities in the Washington, D.C., area, such as visiting the U.S. Federal Reserve.
“What the students have learned throughout finance and in the class helps them a lot,” Horstmeyer says. “We’ve had a few students get a job because we have speakers in the finance world come in and talk to them—if they see that you’re the head of the risk committee on your resume, it’s not a bad thing.”
Overall, the class shows Mason students can handle real-world situations, Horstmeyer says. “We have matched our benchmark this year—the S&P 500—and delivered a little less volatility than our benchmark; we currently sit up approximately 15 percent since the beginning of the year.”
“The course is gratifying in that I get to have experience that I would have certainly gotten only during internships,” says Cisse. “And I am able to help generate a great return for Mason.”