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Xavier students now responsible for $1 million of University’s endowment fund

Select business students given management responsibilities for investment as part of their education in finance

11/15/04

The Xavier Student Investment Fund officially took over management of $1 million of the University’s endowment fund Monday, Nov. 15, as eight students from the new fund’s board of directors met for the first time.

The board’s first action was to approve the investment. In addition to the students, the board includes more than a dozen business leaders including Lawrence Leser of E.W. Scripps Co., Kim Renners of the Ohio Casualty Group and J. Patrick Rogers of Gateway Investment Advisers. Three fixed-income portfolio managers from Fort Washington Investment Advisors will serve as advisers to the students.

The fund will use an enhanced bond-indexing approach in which the portfolio will be indexed to the Lehman Government/Credit Index. It consists of three sectors: Treasury, federal agency and corporate.

“Our goal was to provide a one-of-a-kind educational experience for our students,” said Jamie Pawlukiewicz, chair of Xavier’s department of finance. “Our choice of a fixed-income fund, rather than a stock-picking fund, gives the students the opportunity to develop a unique skill set prior to graduation.”

By contrast, most student-managed funds across the country are stock portfolios.

The fund’s student managers, mostly senior finance majors in the Williams College of Business, are being split into two groups - the economic analysis group and the corporate analysis group. Each will monitor and analyze macroeconomic and financial market conditions, economic indicators, U.S. and world events, Federal Reserve actions and Treasury activities as part of their fund management duties.

Each group is to provide weekly reports on the performance of the fund and economic and financial market conditions, as well as future projections. Based on their financial research, the students are to recommend changes in the allocation of the fund.

Any action to sell or buy bonds must be approved by a two-thirds vote of the students, with the fund’s finance faculty adviser and two Fort Washington advisers having veto power over the students’ decisions.

When an action to buy or sell has been approved, Fort Washington Investment Advisors will take care of the transactions.

The students will manage the fund through the end of May. During the summer months, Fort Washington Investment Advisors will assume responsibility for the fund.

Students are receiving academic credit for their participation.

“It’s really more like an internship,” said R. Stafford Johnson, course professor and fund adviser. “Some are putting in up to 20 hours a week on the fund.”

The students have an office on the first floor of Hailstones Hall and a subscription to Bloomberg Professional Service, an important tool for bond portfolio management.

Xavier University’s Williams College of Business was named in September as one of the “Best 143 Business Schools” by The Princeton Review. Last month, Xavier was again honored by The Princeton Review and Forbes.com as one of the “Top 25 Most Entrepreneurial Undergraduate Campuses in the Country.”