Some University of Toledo business students soon will get a hands-on course in investing - using $1 million in real money to risk in the market.
The University of Toledo Foundation will announce tomorrow that it will provide the money so students can learn outside the classroom while also investing on the foundation's behalf.
While a much smaller pot of about $60,000 has in past years been available for some investing, UT business students learn most of their market skills by making simulated investments using a fictitious pot of money.
"They're going to be investing real money," said Thomas Gutteridge, dean of UT's College of Business Administration at UT. "It's a serious business. You're investing a million, and we don't take that lightly."
The students' investment activities will be closely monitored along the way by UT professors, who will have the power to veto decisions on where to risk funds. There will also be a code of ethics and a set of rules for investing the foundation money. Among the rules: No investments in hedge funds. No international investments. And no day trading or commodities trading, to name a few.
Any proceeds will be turned over to the foundation, said David Van Hooser, who serves as the chairman of the foundation's investment committee and also is a member of a finance advisory board at the business college. The $1 million, he noted, represents less than one percent of the foundation's overall assets.
The idea to provide UT business students with such a substantial investment resource was spearheaded by Mr. Gutteridge, who approached foundation leaders with the request. The dean came to UT in 2003 from the University of Connecticut, where business students participate in a similar program.
Other universities in the United States and Canada have programs where business students invest millions of real dollars provided by the universities, alumni donations, and other endowments. In fact, many university business colleges compete with students at other institutions in annual competitions.
Mr. Van Hooser said foundation members discussed the matter at length before agreeing to put up the money. Though there wasn't opposition to the plan, he said there were serious discussions about adhering foremost to the foundation's fiduciary responsibilities.
Ultimately, Mr. Van Hooser said members decided they must approach the matter by treating UT students like they would any other investment manager. They will have to follow certain standards and achieve certain performance levels against recognized benchmarks such as the Dow Jones Industrial Average. In addition, students will have to provide regular performance update reports to both an advisory board and the foundation.
Unlike other fund managers, though, the students - who've yet to be hand-picked for the activity and aren't expected to begin investing until next fall - won't be charging the foundation a fee for their services.
"I think our whole goal is trying to get the students actively involved in learning. It makes learning fun," said Andrew Solocha, chairman of UT's finance and business economics department.
The venture will dovetail with the creation last year of the Neff Trading Floor at UT, which was made possible with a separate $1 million donation from John Neff, a 1955 UT graduate who was named in a survey of financial professionals as one of the 10 greatest investors of the 20th century for his former management of Vanguard's Windsor fund.
The trading area named after Mr. Neff and his wife, Lillian, contains computers and software that give UT business students access to financial data from around the world, among other perks.
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