After six months of trading, the Intrieri Family Student-Managed Fund at Penn State Erie, The Behrend College, has posted a $12,000 profit. That matches the performance of the S&P 500 over the same period.
“I’m impressed,” said Hunter Holzhauer, assistant professor of finance and a member of the fund’s advisory board. “They’re right with the benchmark. They’re doing as well as the professionals.”
Holzhauer runs the fund through his Portfolio Management and Analysis class. Students choose approximately 50 stocks, balancing companies in the health care, utility, energy and consumer staples sectors, among others. They adjust the allocation on a regular basis.
The fund – the first of its kind at Penn State Behrend – began with a gift from Vincent Intrieri, a 1984 graduate of the college. He is senior managing director of Icahn Capital Management.
Intrieri put up $100,000. Any profit would be reinvested, he said. Money that was lost would be gone forever.
Using real money raised the stakes for what is basically a classroom investment exercise, Intrieri said. “When you’re working with a mock portfolio and you mess up, there’s no damage done,” he said. “But when it’s real money, with real consequences, you focus. You can’t explain it away, saying, ‘Oh, well. My model didn’t work so well.’”
For the summer, student managers have adopted a four-month buy-and-hold strategy. Active management of the fund will resume with a new group in September.
Holzhauer and others on the advisory board continue to monitor the fund, however. With students gone for the summer, board members have the power to make adjustments if the market turns south.
That isn’t likely, Holzhauer said.
“The students prepared for this,” he said. “We’re so well diversified that if anything bad does happen, it should only affect 1 to 2 percent of the overall portfolio.”