Members of two Virginia Tech finance clubs, SEED and BASIS, are faced with a challenge that the average college student probably couldn’t fathom: managing of millions of dollars, all under the watchful eye of the university, of course.
SEED, or Student-managed Endowment for Educational Development, and BASIS, or Bond and Securities Investing by Students, are two independent, student-run organizations that have been given the opportunity to make money for the university while developing skills needed for future Wall Street careers.
Unlike similar programs at other universities, SEED and BASIS are not part of any academic curriculum and are completely volunteer-driven.
SEED began in 1993, when the organization was funded with $1 million after a successful proposal to the Virginia Tech Foundation, a non-profit organization established to receive, manage and disburse private gifts in support of Tech. Former Professor Don M. Chance felt that the campus needed an organization that could train students to manage a fund comprised of stocks in order to learn hands-on skills that would prepare them for jobs at financial firms.
“Co-CEOs” Benjamin Klauder, a senior finance major, and William Hudson, a senior finance and international studies major, currently run SEED.
“It’s about expanding beyond the classroom and going into the real world,” Klauder said. “It’s a nice middle ground between college and jobs. I think that’s what employers are looking for — a bridge between the two.”
Today, SEED runs the nation’s largest student-run investment portfolio, or collection of individual investments, as an extra-curricular activity. The stocks in SEED’s portfolio did so well in the 2008-2009 fiscal year that it posted a profitable gain of 3.92 percent despite a turbulent economy.
SEED training also has a secondary benefit — building personal wealth for its members who are still in school.
“One of the reasons why 80 percent of the people in SEED have their own portfolios is because, once you learn how to value stocks it builds your confidence to put your own money in the stock market,” Hudson said. “That’s why so many of us manage our own money now.”
BASIS, on the other hand, is the newer of the two organizations. Funded in 2006 with one percent of the Virginia Tech Endowment, or $4.1 million, its goal is to manage a fund consisting only of bonds, which are essentially packaged IOUs sold to the public by businesses and government entities. This distinction has made it only one of seven groups in the nation focused on managing a bond fund. The other six are located at the University of Minnesota, University of Wisconsin, University of Texas, University of Dayton, Villanova University and Ohio University.
Like SEED, BASIS’s portfolio posted a profitable gain of 2.68 percent for the 2008-2009 fiscal year and beat the Merrill Lynch benchmark, a conservative financial standard, which it judges its investing performance against. In December 2008, BASIS’s investing efforts were so successful that it returned $700,000 back to the VTF while maintaining its original fund allocation.
“They’ve given us the money for two reasons,” said Eric Eichelberger, BASIS co-CEO and senior engineering major. “One is to produce competitive returns for the university and use that money toward scholarships and programs. The other is to push education, to take kids’ classroom skills and move them into a more real world setting so when they come out of school, they’re a step ahead of everyone else.”
Modeled after financial firms, both SEED and BASIS are headed by two co-CEOs and have departments broken down into sectors that are led by managers with an industry specialty. Below the managers are analysts who conduct the research for future investment buy and sell recommendations.
During their information sessions, both organizations stressed the importance of a 20-hour weekly time commitment. Much of this time is spent in meetings discussing the ever-changing economy and financial climate. Occasionally the groups get together to listen to the many Wall Street guests they invite throughout the year. Most importantly, both groups plan trips to New York City regularly to meet with Tech alumni and network, but the bulk of the time commitment is spent by members conducting individual research for assignments.
Leave a comment 0 Comments Write a letter to the editor
All letters to the editor must include a name, e-mail, daytime phone number and affiliation to Virginia Tech. Affiliation includes: year and major for students; position and department for faculty and staff; current city for alumni and parents.