Penn State Students Manage Multi-Million Dollar Mutual Fund, Land Wall Street Jobs
Two undergraduate students stand before 28 other students – all busily working on their computers – and make a pitch to trade an entertainment stock that's gone up in value for an auto manufacturer stock.
CNBC is muted on two large TVs as stock updates appear on other large screens. Clocks showing the time for London, New Delhi, and other major cities around the world hang on the wall.
As the two students try to make their case for the stock trade, other students raise their hands challenging the pair's findings, all inside the Rogers Family Trading Room in the Smeal College of Business.
This isn't some class exercise for the sake of learning – this is the management of a multi-million dollar mutual fund where real money is at stake and the students make day-to-day decisions year round.
Under the guidance of J. Randall Woolridge, professor of finance, the Nittany Lion Fund has been a course at Penn State for 10 years. Students conducted the first trade in 2005 and managed $2.25 million from 42 investors in the first year. Today, students manage roughly $6.3 million from 81 investors, who are mostly alumni.
The program is unique in that students are managing investor funds as opposed to university endowments, which is more common at other universities.
"In the investment business, it's different when you have investor money as opposed to university money," says Woolridge. "The accountability is at a much higher level because you're investing other people's money. If they don't like what you're doing they can take their money back. The accountability our students have to have to produce a competitive return ... it really changes the nature of the fund because it is investor money."
Another way the program stands out is by what happens to students who've participated in the course. Woolridge says 85 percent of students obtain jobs on Wall Street and most secure those jobs months ahead of graduation.
Emily Zheng is the student president for the program. Already, she's interned on Wall Street. And she'll return there this summer for another paid internship. But this wasn't the plan. The plan was to go to Penn State to earn a business degree, then go to law school.
"Not a lot of people know what it means to be a banker, to be on Wall Street, because there is so much negative press abou it," Zheng says. "I think what I found for myself was more of a home for me than I thought law school would be."
"This is where everyday you're accountable and responsible for what goes on in the classroom," says Woolridge. "It's a much different way of learning. ... It's not reading and writing or regurgitating information, it's taking what you've learned and applying it and knowing you're held accountable for it every single day."
Students put out weekly, quarterly and annual reports and hold an annual investor meeting. They get to know stocks in a detailed way. They can go on a job interview at Wall Street and say, "This stock is a great stock and this is why I buy it," says Woolridge.
The students do not take excessive risks and see average returns, Woolridge says.
"The bottom line is our returns we've earned are pretty close to the market," he says. "Our investors enjoy seeing we're placing 85 percent of students on Wall Street and that's unique for state schools."
For Zheng, the best memories from her time at Penn State happened in the trading room.
"It's really intense. You're surrounded by people who are equally as passionate about it as you are," Zheng says. "At the end of the day the buck stops with me."