Student-Managed Investment Funds Turn Pro: Innovation, Benchmarking, and Performance.

This article seeks to survey the landscape of student-managed investment funds and to document recent innovations in fund organization, governance, investment strategy, and trading behavior. In addition, we examine fund performance and offer advice on best practices for investment management. We survey 102 student managed investment funds from 93 universities, spanning 31 states. The average school hosts 1.73 funds, and the average fund manages $4 million in assets. Almost all funds select new assets based on investment pitches, and fund members vote on or approve new investments in more than half of the funds. Most of the funds are equity focused, with large cap, value, and mid-cap sizes and styles the most common. Increasingly, funds are incorporating other asset classes in their holdings and using quantitative or algorithmic models to assist in asset selection or capital allocation. Self-reported fund returns for the year 2021 range from −47% to +40%, with a mean value of 19.71%. In our sample, 36% of the funds reported alphas, ranging from −15% to +14%, with a mean value of −0.22%. We find no statistically significant relationship between fund performance and school enrollment figures, and a positive but statistically insignificant relationship between fund performance and fund size. The best performing funds are hosted by student organizations and led by students. They allow frequent or unlimited rebalancing and trading, and empower students to seek alpha. [ABSTRACT FROM AUTHOR]