The University's $2.3 billion endowment may be the smallest in the Ivy League, but Brown boasts one of the strongest student investment groups among its peers.
The Brown Investment Group, which has about 50 active members, manages $106,000 of the University's endowment with little oversight from the Investment Office.
"The primary goal of the group is to educate Brown students about investing and the process of evaluating investments while also performing well and beating the S&P 500," said Christopher Manatis-Lornell '08, who serves as co-managing director for the group.
Last spring, Joseph Leung '07, one of the group's co-presidents, attended the Ivy League Investment Club Conference, which brought together members of other Ivy investment clubs at the Goldman Sachs headquarters in New York City. Based on his experience attending the conference, Leung said the Brown Investment Group has one of the strongest organizational structures of the Ivy League groups and - unlike many of its peers - manages real money.
"Surprisingly, we were one of the strongest groups there. I think only Yale manages more endowment, and other schools (such as Cornell) make their students take on personal risk to be in the club," he said.
Manatis-Lornell, who also attended the conference, said many of the other Ivy student investment clubs were more career-oriented and received less institutional support compared to Brown's club.
The group's mission includes an effort to educate students about investment. It begins its weekly meetings with a presentation about investing, and members of the group act as mentors to other students interested in learning more.
Sandra Seibel, director of Investment Office operations, said the group is primarily meant to be an educational tool, adding that the Investment Office has a good relationship with the group and has been pleased with its performance.
Michael Mahan '07, the group's portfolio manager, said the group, which currently holds a portfolio of 19 stocks, has performed well with its investments, beating the S&P 500 three years in a row and earning a 29-percent return last year. Mahan said the group currently holds $110,000 in assets - an increase of $8,000 since the start of the year.
"We don't carry a lot of risky investments. We look to buy established companies that we feel are undervalued in the market, and that is where a lot of our profits have come from," Mahan said.
The group must adhere to certain restrictions established by the Investment Office but has considerable autonomy in its operations, according to David Wishnick '07, another co-president. The group independently decides which companies to invest in and contacts the University's Wall Street broker directly.
The Investment Office retains the ability to review each trade the group makes and has the power to intervene if investment officials deem a certain decision to be irresponsible, though Wishnick said a student decision has never been overruled. The group meets with the Investment Office once each semester in order to update the University officials on the group's recent activities.
"The group is quite well-run, and we are comfortable with how the group is managed organizationally," Seibel said. "They have a good turnover plan, which is important because there is a lot of student turnover, and they have a strong organizational structure."
The group's leaders said the organization's deliberative process helps ensure its autonomy and plays a large role in its financial success.
"Students bring a lot of knowledge of market trends to the process, and I think our deliberative procedure brings the best ideas to the floor," Wishnick said. "We are not afraid of taking risks that might go against the grain of what an institutional investor might do."
The group undertakes a thorough vetting of each potential trade before taking any financial action. The process for making a change to the portfolio takes two weeks and involves considerable deliberation among group members.
"One of the best parts of the group is that it is very democratic. There is a lot of deliberation between group members, and we have an equal voting process," Mahan said.
Manatis-Lornell, a double-concentrator in economics and art history who had no prior investing experience before joining the Brown Investment Group, said the club has provided him with a valuable learning experience.
"I would love to work on Wall Street and go into investment management, and I think (the investment group) has played a significant role in that," he said.
Wishnick, an urban studies concentrator, said the club attracts both students with personal investing experience and those who haven't invested before. Not everyone in the group is eyeing a career in finance, though he regularly receives recruitment e-mails from major Wall Street firms seeking to contact students from the group, he said.
Mahan, who wants to work in financial planning, said participating in the investment club has given him exposure to the field of finance and provided him with a good base of experience.
"It's much easier to correlate theories in classes, having (had experience in the investment group). It's definitely been a great real-world application of my academic pursuit here," he said.
