About SIM
The SIM Story
The OSU Student Investment Management Program (SIM) combines traditional academic objectives with the practical demands of hands on investment management. OSU is pleased by the favorable media attention the program has attracted. However, contrary to published reports, we do not presume our students can beat the market on a systematic basis (even though they have thus far). Instead, the trustees, administration, and faculty at OSU view the program as a unique opportunity for delivering high quality practical education in an area of considerable interest to students and employers alike. Following an initial "paper dollar" experiment that lasted roughly one year, a team of students in 1990 developed a proposal for managing actual endowment funds and made a formal presentation before the Investment Committee of the University Trustees. On the basis of the proposal and favorable results during the trial period, the student team was awarded a $5 million equity account. A burst of media attention followed the initial press release, including a spot on the "Today Show". Coverage of the first anniversary of the program was even more intense upon the announcement that the student account had earned 20% or $1 million while the market in general had only returned 13.5% as measured by the S&P 500 index. Students battered their own mark by posting a 25% return ($1.5 million) during the second year of the program. OSU formally reviews the performance of their fund managers at the end of the first three years.
In the case of the Student Managed Funds, the review led to an additional allocation of $2 million to be managed by the students. Thus, the principal allocated by the University is currently $7 million, and together with appreciation (but net of interest and dividends) the current value of the portfolio exceeds $20 million. From its inception and through its continuing evolution, the OSU SIM program has been an integrated effort of many individuals and groups. The student management team is at the hub of the network, but there are essential ties to and support from the following: University TrusteesOSU Trustees proposed the project, monitored its early development, and approved the final plan. In addition, the Board continues to supervise both the investment and academic merits of the program.University AdministrationThe student team was "hired" as an equity manager subject to the same conditions and limitations that apply to any other equity manager for the University Endowment with one notable exception; the Office of the Treasurer serves as the formal manager of the account. Thus far, the Treasurer has been able to follow all of the advice provided by the student management team. However, should the need arise, the Treasurer is free to override decisions or to take independent action. This arrangement avoids potential legal problems with fiduciary responsibility. It also eliminates technical problems due to the academic calendar (vacations, quarterly turnover of managers, etc.)Other University offices are involved with the SIM program as well including University Communications which helps coordinate media relations. Fisher College of BusinessFiscal responsibility for the management of the program rests with the Dean's office. The Office of External Affairs also assists with program publicity, media relations and special events.Securities IndustrySupport from the securities industry has been extensive. In the early stages it was difficult just to acknowledge the many offers of help. Over time, we have more found effective channels for this support which now includes summer internships, speakers, and state-of-the-art investment information services, as well as economical commissions for trades and services.Support TeamSelected former students are responsible for essential "backroom" operations such as accounting, reporting, and lab supervision. These students work with the program over an entire year and eliminate many problems we initially encountered with a quarterly turnover in student managers |
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