The UAB Green and Gold Fund, which began with $300,000 in 2005, has nearly doubled in value since its inception, outperforming the Dow Jones Industrial Average, the S&P 500 and the NASDAQ. The feat is made more impressive considering the fund is required to hold lower-risk, lower-returning investments such as cash and bonds.
“We have a portfolio of stocks, bonds and other securities valued at about $525,000, and the students collaborate on the management of these assets,” says Jacob Gelber, J.D., MBA, the fund’s faculty advisor in the UAB School of Business. “Managing the fund leads to professional credentials sought after by employers, such as real-world experience analyzing and investing in the financial markets. It makes our members more valuable to firms once they graduate. Job candidates who come after them in an interview room may be limited to talking about what they learned in a textbook.”
“The fund is a collective responsibility of all the members,” says Daniel Phillips, UAB senior and chief investment officer. “The more responsibility you have, the more important it is to constantly work and develop your investment thought process.”
The process is working. The fund recently won its second consecutive national championship for Alternative Investment Style in the R.I.S.E. XII Forum, the largest national collegiate portfolio competition. That fund category permits it to sell covered call options and invest in commodities-linked, exchange-traded funds. The team also placed second in the balanced portfolio category, behind a school from Canada, making it the top U.S. university in two categories.
The students communicate daily about the markets and meet once weekly to discuss the stocks they will buy, sell or hold. Each fund member at the portfolio manager level or higher casts one vote on the recommendations made. Gelber, the advisor, does not have a vote, making it a true student-managed investment fund. And while he is quick to point out the members of the fund are chosen through a rigorous application process, these are still 20-something-year-old students managing more than a half-million dollars of real money.
“I think we are poised to become a nationally ranked business school,” says Gelber. “That is the goal. We have the faculty, the students and the resources — everything we need — and you’re seeing that reflected in the impressive performance of the fund and the success of our alumni.”
Joshua Carpenter, a 2010 graduate of the UAB School of Business and 2012 Rhodes Scholar, is a former member of the fund. Daniel Wilson, the fund’s CIO when they won their 2011 national title, will graduate from the School of Business on May 12, 2012, and already accepted a full-time job with Fidus Partners, an investment bank based in Charlotte, N.C. Wilson currently works at Harbert Private Equity in Birmingham.
“Not many students in college have experience analyzing hundreds of business models by the time they get their first internship,” says Wilson. “We tell students who would like to be members of the fund, that it’s not prior experience we expect, it’s the willingness to dive into something, continuously learn and follow it. That’s the way you’ll learn and succeed in investments and at UAB.”
The fund has relationships with several prestigious investment firms located in Birmingham, including Harbert, Sterne Agee, Protective Life, Morgan Stanley Smith Barney, Bank of America Merrill Lynch and UBS. It has been profiled by national news media outlets including CNBC and Bloomberg Businessweek.
The students who work on the fund are a stock market anomaly. They are short-term investments considering that most are able to serve on the fund for only a few years. They are long-term returns when you consider their experience makes them a valuable commodity any smart company would want to invest in.
|GREEN AND GOLD TOP TEN|
|Stock||Bought||As of April 30||% Increase|
|Abbot Labs (ABT)||$51.97 (9/30/11)||$62.06||19|
|Apple (AAPL)||$353.54 (3/24/11)||$583.98||65|
|Altisource Portfolio Solutions (ASPS)||$29.60 (2/4/11)||$59.83||102|
|Bank of America (BAC)||$5.54 (11/21/11)||$8.11||46|
|General Electric (GE)||$11.97 (4/17/09)||$19.58||63|
|Google (GOOG)||$483.81 (9/13/10)||$604.85||25|
|iShares S7P Global Technology (IXN)||$31.98 (11/21/08)||$69.11||116|
|PowerShares Oil & Gas Services (PXJ)||$11.87 (1/20/09)||$20.47||72|
|United Parcel Services (UPS)||$61.44 (9/23/11)||$78.14||27|
|Verisk Analytics (VRSK)||$33.50 (9/9/11)||$48.95||46|