Investing in Students Pays Dividends

At the Darden School of Business, $10 million of the school’s endowment is not managed by investment firms, faculty or administrators. It is managed by MBA students. Similarly, students at the McIntire School of Commerce are managing more than $670,000 and generating earnings for the school. It’s all part of a successful effort to give students real-world experiences beyond classroom learning.

The student-run Darden Capital Management club makes all investing decisions for five funds with assets totaling more than $10 million. Students research and pitch stocks to second-year MBA portfolio managers, who determine which to buy and sell. In total, each student team, consisting of one senior portfolio manager and three portfolio managers, is responsible for about $2 million of the school’s endowment. Students in Darden's MBS for Executives program have begun a similar program managing some of the program's funds.

Many other business schools have capital management clubs, but most do not grant students the type of investment decision-making autonomy granted by Darden Capital Management, said Associate Professor of Business Administration Richard Evans, the faculty adviser for Darden Capital Management. While other clubs require faculty approval for stock purchases, Evans does not have authority over purchasing decisions — and does not want it. “We want this to be entirely student-run,” he said. Over the past 10 years, Darden Capital Management has outperformed each fund’s benchmarks by about 2 percent each year. Academic research suggests that most mutual fund managers, on average, underperform their benchmarks substantially, according to Evans. 

“Having the opportunity to invest the Darden endowment and grow it is one-of-a-kind,” said second-year Darden student Marci Stewart, chief operations officer of Darden Capital Management. Stewart joined the club with an interest in investing, but little experience outside of her personal finances. Picking stocks and learning from classmates’ investment strategies helped her secure a summer internship with Fidelity Investments after her first year at Darden. 

Other club leaders report that the investing experience has given them an edge in the very competitive MBA recruiting process. “These companies ask their analysts to make decisions on billions of dollars and it is very difficult to predict how someone is going to react with that amount of pressure on the line,” Jake DuBois, the club’s chief executive officer, said. “Seeing Darden Capital Management on a student’s résumé tells employers that this student has made decisions with real money, sometimes with hundreds of thousands or millions of dollars on the line. That experience is irreplaceable.”

Student-Run Investment at UVA

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Darden Capital Management
Students at the McIntire School of Commerce have grown a $100,000 endowment established in 1994 to approximately $670,000.
Rivanna Investments

Darden students join the club and begin evaluating stocks during their first year. Through a competitive application process, 24 students are selected to enroll in Evans’ second-year Darden Capital Management course, where they are evaluated for their investing performance. Twice a year, the group presents their investments to Darden’s Board of Trustees who, Evans said, “grill the students” about investment decisions. 

“It is a real honor to be able to manage such a significant amount of money on behalf of Darden and to have the confidence of the faculty and the Board of Trustees,” said Claire Lewis, the club’s chief investment officer.

Seeing Darden Capital Management on a student’s résumé tells employers that this student has made decisions with real money.

Undergraduate students in the McIntire School of Commerce enjoy similarly realistic experiences through the student-run McIntire Investment Institute. Students manage a portfolio valued at approximately $670,000, grown from a $100,000 endowment established in 1994 by John Griffin, president of Blue Ridge Capital and a member of UVA’s Board of Visitors. As with Darden Capital Management, McIntire students research and execute all investments, with faculty in an advisory capacity.

Since its inception, the institute has donated $150,000 back to the school and pledged another $100,000 donation during the last academic year. The money has been used for new technology, building renovations and other improvements.

“The portfolio doesn’t sleep while you are away for holiday break,” Evans said. “The stocks are still going up and down and it is still your responsibility.”

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