“No investment yields as great a return as the knowledge and experience we gained in the class,” said two students who had completed the Student Managed Investment Fund (SMIF) course this summer.
Max Ho and Doris Yip, studying BBA in Finance & Economics and BSc in Quantitative Finance respectively, said the course was not simply about speculating and trading stocks, but provided a structured approach for them to learn investment management, securities research, and the right attitude to be an investment professional.
With a donation from Value Partners Group Ltd in 2011, HKUST Business School established the Value Partners Center for Investing to support research and training on investment management. In addition to various research and academic activities, the Center has also introduced a course with a fund of HK$5 million to provide students with hands-on experience in managing an investment portfolio. As at May 2014, the fund since 2011 netted a profit of up to over HK$1.2 million or 3% higher than that of the Hang Seng Index during the same period.
Building a sense of responsibility
Max recalled, “We were certainly pleased to see the stocks we chose outperformed in the market, but the real satisfaction comes from how we learned to be a responsible fund manager.”
“If it is my own money, I can make the choice I like, and only I know how good or bad the return is,” he explained. “But when it comes to the money of investees in future, we will be held accountable for every penny we invest. They could be the life-long saving of a retiree or a saving trust to help the poverty.”
With prudent investment guidelines and principles in place, the students invest based on a bottom-up strategy, which means focusing on the analysis of specific companies or individual stocks. The class with a mix of undergraduate and MBA students is split into groups of four or five, each representing a couple of different industries. Each group is required to submit research reports on their recommended companies and participate directly in the stock selection process.
Doris said, “We look at a stock based on company fundamentals and identify value stocks, seeking long term appreciation potential, not short-term speculation. After all, we need to present our recommended stocks to the Investment Committee, which includes faculty advisors of the course, student portfolio managers and the associate director of the Value Partner Center. The Committee will undergo a voting system before any investment decisions are made.”
Learning from one another
“I felt some pressure at the beginning as I was the only second-year student in the class and inexperienced in fund investment, especially when compared with those MBA students who have practical experience in the field,” Doris said.
Of the 20 students in the SMIF course, around half are MBA and overseas exchange students with some veteran fund managers and industry experts. Doris said it was a valuable experience to study with them as they offered a very different perspective and they were willing to share their real-life experiences.
Professor Samuel Liang, Associate Director of the Value Partners Center for Investing and Adjunct Assistant Professor of the Department of Finance, said, “This combination creates an environment where students of different backgrounds can learn from each other. For example, our undergraduates can act and learn as fund managers, while MBA students even with seasoned investment experience can act as an analyst and contribute to the team work from a different perspective. Meanwhile, our overseas MBA or exchange students can also learn from local students more about the mainland economy and companies.”
Looking forward, Professor Liang said the course would continue to train responsible investment professionals with the practical skills required. The fund would look at other investment options such as those from the Shanghai-Hong Kong Stock Connect announced earlier this year.
Max, a graduate of this year, has been recruited by a major bank as a management trainee for its commercial banking business. He said even he would not involve in stock investment in his coming duty, the knowledge he learned from the course such company analysis would be useful for him to help the bank select a right client, if not a right stock anymore.