Group gives Ohio University students practical experience in the investment world
Feb. 5, 2007
By Laura Yates
Ohio University senior finance major Ryan O'Brien knows how important it is to seek out educational experiences beyond the classroom.
"Today students really have to do something outside of regular classes. You have to have more than just a 3.5 or 4.0 GPA; you have to strive to differentiate yourself from everyone else," he said of college students who anticipate good job placement after graduation.
The university's Student Fixed-Income Management Group gives O'Brien, the group's chair, and five of his peers the chance to gain hands-on experience working in the investment world. The group focuses on researching and investing in the bond market, working together on a weekly basis to draft bond proposals and presentations for purchases.
After a preliminary year of research and strategizing, the group now is increasing and diversifying its investments and hopes to make between 12 and 15 purchases. Four corporate bonds totaling $140,000 were purchased during the 2005-06 academic year.
"Right now is a great time to start investing in the bond market because a lot of forecasters say inflation is slowing and interest rates may start to drop in early 2007. Investing now will allow us to profit from that," O'Brien said. "Purchases are entirely up to the group. We do all the research and have a lot of leniency. When we find something we like, we sketch up a bond proposal and give it to (our adviser) for approval."
With nearly $1 million at their disposal, members gain unique skills in real-life investing. The Ohio University Foundation provides the group with investment funds while any returns generated by the group go directly back into the account. The foundation requires the group to e-mail monthly performance reports and to meet with the board once a year.
"There are only a couple similar programs in the country and not many of them with as much money as our group," said Associate Professor of Finance Andrew Prevost, the group's adviser. The experience is valuable, he said, because the technical aspect of the bond market makes it challenging to fully grasp.
O'Brien said he joined the group because it offers a rare opportunity to focus on fixed income. The equity market often receives greater focus and overshadows the bond market in several of his finance classes, he said.
"I really wanted to do something outside of regular class. You need to make yourself different from everyone else to be successful," he said.
Former fixed-income member and university alumnus Kevin Maxwell said participation in the group gave him confidence to speak intelligently and professionally about fixed income in job interviews.
"Without a doubt I wouldn't be where I'm at now had it not been for my involvement with the group," he said.
Maxwell, who graduated last year with degrees in finance and accounting, works with RBS Greenwich Capital in Greenwich, Conn. He specializes in compiling trading profits and losses, including bond pricing, updating hedge ratios and ensuring trades are booked properly.
"The students manage the portfolio much like the university manages the rest of the endowment," Maxwell said. "They go through the whole process of researching trade ideas, calling the broker to discuss investment opportunities and making a proposal for a trade execution. Coming straight out of school with that experience is very unique and is what employers are looking for."
Prevost said he believes the group represents a simple equation of supply and demand. "Our students have the experience to fill a large demand. There are lot of jobs in fixed income and not that many graduates with experience," he said.
Ohio University's Student Fixed-Income Management Group was modeled after the successful Ohio University Student Equity Management Group. The Equity Group initially received $100,000 from The Ohio University Foundation and has been managing and investing endowment funds since March 2002. In spring 2005, the group received an increased allocation of $1 million.
Laura Yates is a student writer with University Communications and Marketing