Archway Investment Fund redefines classroom experience
The fund affords select students the opportunity to manage a real portfolio of $730,000 and pushes them to break out of the "semester only" mindset. AIF alumni say the hands-on nature of the class helped launch careers.
You clear your throat, stand, and make a pitch to invest in Universal Health Services Inc., a Fortune 500 hospital management company. Your professor is listening intently from the back of the classroom as you point to recent legislation that makes the stock particularly attractive in your eyes.
Your classmates are reviewing the rest of the portfolio – a Google spreadsheet grouping the holdings by sector – on their computer screens, mentally weighing the pros and cons to determine how UHS would fit in with the rest of the stocks.
“Who else is going to give you $700,000 to manage? That real-world experience is invaluable."
“Is that debt to equity ratio typical of the sector?” one student asks as the group decides what its next move will be. For a college student, “It’s scary making these decisions,” says Michael Leonard ’13. “In the investment world, $30,000 is a drop in the bucket, but for us, it’s crazy.”
Far from the average lecture hall class, this scene is typical of the “classes” offered through the Archway Investment Fund at Bryant University.
The fund, which affords select students the opportunity to manage a real portfolio of $730,000, began in 2005 as the brainchild of David Louton, Ph.D., associate dean of the College of Business, Professor Peter Nigro, Ph.D., and Professor Hakan Saraoglu, Ph.D.
The fund started with $200,000 and has grown 265 percent over the years. Professor Maura Ann Dowling, who leads the Portfolio Management class, takes special note of the students’ performance in 2008, when the market was in a free fall and the fund outperformed the Standard & Poor’s 500 stock market index by 3.5 percent.
The AIF program consists of two classes. Students first get their feet wet researching stocks and making recommendations to their classmates in the Securities Analysis class. Then, they move on to the Portfolio Management class in which they are responsible for the final decisions.
ENDING THE 'SEMESTER-ONLY' MENTALITY
“The students have a seminal experience that helps them really understand all the facets of guiding someone through the markets,” says Dowling. “They have to manage the fund not for themselves, but for future classes.”
Students who want to participate in the AIF must interview with three faculty members as well as the student members of the AIF Executive Board.
The students "have to manage the fund not for themselves, but for future classes.”
“It’s about thinking long term - about who’s coming behind me. Some of the [national] financial sector hasn’t been able to think that way. So if we can teach them that here, we help develop an ethic,” Dowling says, adding:
“The students learn to think about their own emotions, the emotions of the market, and the disciplines they follow. It creates a metaphor for many different ways of healthy thinking in business – not just portfolio management.”
ALUMNI CONFIRM BENEFITS
“The same principles I learned in the Archway Fund I use on an everyday basis,” says Tarang Patel ’07, a mergers and acquisitions advisory manager at PricewaterhouseCoopers, a multinational professional services firm.
Patel was interested in trading stocks early on: In high school, he would invest in companies that he thought were “cool or exciting … not knowing the true valuation of that company.”
“Bryant’s securities class allowed me to understand the fundamental components of a company and apply those in my strategies. It helped me round out my investment process,” Patel says.
When Patel was looking for a job, the AIF also gave him a leg up on other candidates.
“Talking about the responsibilities you’re taking on while on a campus – picking individual stocks, identifying the risks that would go along with that decision and ultimately being responsible for that decision – goes a long way. It’s not a fake fund; there are consequences in terms of actual dollars being lost or gained,” says Patel.
THE ART OF INVESTMENT
“Portfolio management is an art,” says Professor Dowling. “A portfolio is a group of securities that you somehow believe in, that you monitor and that interact with each other in a variety of different ways.
“One of the great ways that the students grow and develop in the fund is that they learn about team dynamics in a whole new way. Instead of thinking that leadership is a few people who do the most, they suddenly realize that they must count on their team for this whole thing to work. Hoarding activities or jobs is actually detrimental to the organization.
“They must share, they must discuss, they must debate, they must question one another,” says Dowling. “Schools make us afraid to be wrong; in the portfolio management class we try to create an environment where you feel safe to scratch your head and say ‘I think…I wonder’ and make sure we don’t idealize a stock -- because that’s a trap.”
“It’s a great learning experience because you’re not just learning about stocks, you’re learning about how other people see stocks,” adds Matthew Pelletier ’14.
"It’s not a fake fund; there are consequences in terms of actual dollars being lost or gained."
AIF, A SELLING POINT
Michael Leonard ’13, who has a triple concentration in finance, economics, and applied statistics, says the Archway Investment Fund was a selling point for him when he was trying to decide on where to attend college.
“Who else is going to give you $700,000 to manage? That real-world experience is invaluable. Now, I see the benefit of it in job interviews. People are so impressed and amazed that you have that experience as a kid in college,” says Leonard.
“Professor Dowling doesn’t get up and lecture to us for an hour. In fact, she rarely stands up in front of the class at all. She runs the class like a managers meeting,” he says. “You’re looking at a company and asking each other: Do we want to hold this stock? What has the sales growth looked like? What’s happened to their margins during that time?”
Trevor DeVitto ’13 agrees: “Most college students don’t get to see things going on in the outside world, or really understand what the market’s about. When you’re in the Archway Fund, you really get to see how the market really is and you get to put a value on it.”
“If someone asked me in an interview what I do when I research a stock, now I have a great timeline of things that I do. A year and a half ago, I would’ve had no idea,” adds Pelletier. “It’s truly knowledge that I couldn’t have gained without this class. I couldn’t have taught myself on my own – I tried, and it’s didn’t work. That’s my takeaway.”