Key Foundation gives $150,000 for Student Managed Investment Fund, Business students will invest $300,000

Dr. Chenchu Bathala

The Key Foundation, a foundation funded by KeyBank, has awarded 150,000 to the Nance College of Business Administration to create the KeyBank Student Managed Investment Fund (SMIF). KeyBank’s generosity will allow students to gain real-world experience in investments and portfolio management using real money, thereby boosting their academic credentials and career opportunities.

The Key Foundation will provide $50,000 per year for three years to create the KeyBank Student Managed Investment Fund. The Nance College, through the Cleveland State University Foundation, will match Key’s funding with $50,000. In addition, the CSU Foundation Investment Committee voted unanimously to place $100,000 of the CSU Foundation endowment with the SMIF, bringing the total initial investment in the Fund to $300,000. The Fund will become self-sustaining.

SMIFs are recognized for their value in teaching students, especially finance majors, about critical aspects of investment analysis, investment decision-making and portfolio management. Students will gain valuable hands-on experience by investing real money in different types of vehicles — stocks, bonds and mutual funds — based on their own research and evaluation of risk and return.

“We’re most grateful to Key for this wonderful opportunity for our students. The Fund is an excellent teaching tool to prepare them for careers in finance and related fields,” said Dean Scherer. “Student fund managers will gain real-world experience with real risks and rewards. This advanced experience has the potential to make a great impact on the economic vitality of our region.”

“This program is a perfect fit for our charitable giving strategy of promoting economic self-sufficiency through financial education and workforce development,” said Margot Copeland, Director, Corporate Diversity and Philanthropy for KeyCorp.  “And we are proud to partner with the Nance College of Business, to help continue their fine tradition of training the business leaders of tomorrow.”

Currently, there are 200 SMIFs in the U.S., many of which out-perform their benchmarks. For example, the fund at University of Minnesota’s Carlson School provided a return of 37.5% during 2005-06 versus 27.8% for the Russell 2000 growth-stock index. The University of Houston’s Cougar Fund, which manages $5 million, generated an 8.8% annualized return since its inception in 2002, compared to a 5.6% return for the S&P 500 Index over the same period.

The gift from the Key Foundation enhances the Nance College’s expertise in financial management and allows the College to attract and retain the best students, Scherer said.

The student managers will also reflect diversity in academic backgrounds and professional experience as well as race and nationality. Business administration, finance and accounting programs are among the top 15 majors chosen by minority and women students at Cleveland State at the undergraduate and graduate levels. Plans are to use a portion of the earnings for a scholarship that would reflect a commitment to diversity.

The KeyBank SMIF will complement the Nance College’s Stalla-Becker Conviser partnership that offers a for-credit course to prepare students for the Chartered Financial Analyst (CFA) exam.  Cleveland State is the only school in the region to offer a course to help students prepare for this rigorous exam that establishes the highest level of proficiency in investment-related experience. Students pursuing the CFA will be able to apply the core concepts of investment decision-making as managers of the KeyBank SMIF.

A website for the Fund will be created, and students will prepare quarterly reports that will include the Fund’s current holdings, major buy/sell decisions, performance for the quarter relative to the benchmark (S&P 500 Index), measures of risk and return and other news.

An Advisory Board to mentor students may include representatives from the College Dean’s Office, CSU Foundation, KeyBank, the investment industry and finance faculty.