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Students Beat the Markets in Managing CSUN’s Portfolio

March 18, 2019

CSUN Students Beat the Markets in Managing CSUN’s Portfolio

Using the latest investment software, intense research and hours spent on targeted analysis of the financial markets, the students in California State University, Northridge Finance 491A and 491B: Student Portfolio Seminar are outperforming finance professionals and turning nearly $5 million of investments into scholarships, research and other opportunities for the university.

“It’s not easy,” said finance professor Mike Phillips, who teaches the seminar. “It’s a lot of hard work, probably some of the hardest work they have ever done, but they are doing it. They are making money for the university.”

From fall 2015, to present, the dividend portfolio has grown from $2,151,315 to $3,297,801, an annualized return of about 14 percent compared to the benchmark return of about 11 percent per year.  The “return per unit volatility,” a common measure to see whether investments are gaining return by making investments that are too risky, is about 1.34 for the student portfolio compared to 0.83 for the benchmark. CSUN earned almost $323,000 more on the student-managed portfolio invested in relatively safer assets than the portfolio would have received with the average market return.

When the first investment class met in 1993, the students were allocated $500,000 by The University Corporation, a CSUN auxiliary, to invest with the goal of providing a real-world context for what the students were learning in class. Despite the economic downturn at the time, the students’ investment portfolio beat Standard & Poor’s 500, a financial index, and earned a small profit for the university.

Over the years, the single class has grown into a two-class seminar, and the amount of money the students handle also has grown. They now manage about $5 million, with about $3.5 million from The University Corporation, and the rest from the CSUN Foundation, the nonprofit fundraising arm of the university. Their investments, and the two classes, are divided between two portfolios, stocks and exchange-traded funds (ETFs).

The only thing that hasn’t changed is that the students continue to regularly outperform Standard & Poor’s and other financial indexes. (Continue Reading Here).