Stellar Returns

Members of the Student Management Investment Fund learn finance — and often out-perform the pros. Members of the Funds-Investment Management Committee are, from left to right: Ben Ludlow ’22, Sean McClellan ’22 and Kya Primm ’23. /Photo by Keith Walters ’11

Dedicated alumni and donors — and a keen eye for investments — yield positive results for business students.

By Carol Marcy

Ryan Austin ’22 is president of Geneseo’s Student Management Investment Fund (SMIF), whose members invest money in the stock market. Between September 2020 and May 2021, they pulled a 19.01 percent return on investments — bringing in approximately $72,000. 

Solid investment decisions like those have brought the club’s total assets to more than $450,000. For years, Geneseo students have outperformed the pros. “It’s a very good return for the College,” says Austin, “and validation for all the work we’ve been doing.” 

SMIF was founded in 2007, with $15,000 seed money for the students to invest from a small group of dedicated donors, including School of Business alums and Geneseo Foundation Board members. Donors provided an additional $10,000 of seed money in 2014. The club and its expertise have grown over time. This year, 33 SMIF members met weekly to address market movements and trade securities. The SMIF executive committee, including Austin, met more frequently. 

The fund’s five-year growth average stands at 10.5 percent. “A good long-term return is generally in the 7 to 9 percent range, so this return of 10.5 percent is very impressive,” says Ed Pettinella ’73, a School of Business alum whose finance career spans 28 years at several financial services companies. Most recently, he served as CEO of Home Properties, overseeing the company’s $7 billion real estate investment trust.

Over the years, SMIF has advanced from stock selection to comprehensive wealth management, expanding to include equity research, portfolio and risk management practices. The funds are reinvested each year as part of the long-term endowment for the Geneseo Foundation. 

Donors to the Foundation Board put in that seed money,” says Bob Boyd, SMIF advisor, finance lecturer and School of Business internship director, “and we’ve been able to grow it with good performance — beating the benchmark and the pros.”

Alumni in the finance field believed in SMIF members’ skills and the experience of real-time investing. In 2016, they united to fund and open the Edward Pettinella ’73 Trading Room in the School of Business. The layout resembles a Wall Street trading room and houses several Bloomberg Terminals, live stock exchange updates, and space to trade and work that’s professional.

Pettinella championed the vision of a trading room and made a $750,000 gift to create an endowment supporting the facility’s annual operating cost. He is recognized by the College as a Donor of Distinction for lifetime giving of more than a million dollars.  

“I wanted to provide the best technology and tools to teach students,” says Pettinella. “It is especially important for students who might not know if they want to pursue a career in trading, portfolio management or stock analysis. The trading room is a Grand Central Station for those activities.” 

When Noah Gerlach ’22 joined SMIF as a first-year student, he took an interest in equity research and began to personally invest. He now serves on the SMIF executive committee and oversees the technical and short-term trading strategies. 

“It’s fun doing the research,” Gerlach says. “Getting to interact with other students and friends is fun, and you gain multiple perspectives on what you think a company might do, the future outlook and other metrics.”

SMIF students also build relationships with Geneseo business school alums, who provide mentorship and professional advice. Together, these experiences have shaped career paths. Jonathan Drabek ’18 is now an assistant vice president of Environmental and Social Risk Management at Citigroup, a global leader in banking and wealth management. 

“Working in SMIF was by far the most significant professional development experience I had at Geneseo,” says Drabek, who was SMIF president in his senior year and a member since he was a first-year student. “It demonstrated my interest in the industry, developed financial analysis skills, taught me how to sell my ideas and form opinions, and provided mentorship from fellow students and alumni. All of these were critical in finding a position in finance post-grad.” 

Now, SMIF members are also using their investment power to advance the college’s sustainability efforts and the United Nations’ Sustainable Development Goals. Members have adopted an environmental, social and governance policy (ESG). In the decision-making process of buying and selling stocks, SMIF members consider how companies care for the environment and their employees, implement diversity and inclusion practices, and act on other ethical considerations. It’s also a good investment model.

“ESG responsible investments have performed better than others over the last three to five years,” says Boyd. “It’s important for us to be good stewards for alumni and donors. SMIF is doing the right thing environmentally and socially with the funds that have been entrusted to us while earning better financial results.” 

HOW TO: Key Tips for Investing
Members of the successful Student Managed Investment Fund (SMIF) say understanding the complexity of investments doesn’t need to be hard. SMIF President Ryan Austin ’22 and Noah Gerlach ’22, an executive committee member who oversees the team’s technical and short-term trading investment and research aspects, share key advice for making everyday investing decisions:

  • Diversify your portfolio
    It’s important to have a diversified portfolio to reduce risk. Consider the asset class, size of company, sector, and country of the company you will invest in. Don’t be too heavily weighted in one of those areas, as a market downturn in that area could lead to significant losses in the long term.
  • Weigh risk versus reward
    The higher the potential return, the higher the risk. Risk tolerance is different for all investors, but consider how much risk of losing money you are willing to take to realize a return. Volatile investments — those with larger movements in security value over time — are often considered the most risky. For example, stocks with a beta value of greater than 1.0 tend to exhibit more volatility and larger price fluctuations compared to the rest of the market. These stocks can provide returns significantly greater than or less than the return generated by the overall market.
  • Understand your investment
    Make sure you understand how your selected investment generates return — whether it is profit on share price increases for equity holdings or profit from interest payments on fixed income assets such as bonds. When buying a stock, you are really purchasing a position in the company. Thoroughly research the company to understand how the company operates, so you can evaluate the likelihood of future profitability.

If you would like to make a gift to support SMIF students and/or volunteer as a SMIF mentor, please contact Bob Boyd at boyd@geneseo.edu. 

 

 

Author: geneseoscene

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