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SBA Portfolio Class Outperforms the Market
SBA Portfolio Class Outperforms the Market

In 1997, Professor Janet Hamilton started a portfolio management class in partnership with the CFA Society of Portland. Since then, two other funds have been added, the D.A. Davidson account and the Ray and Betty Guenther fund. Each year students take the 6 credit course and manage an investment portfolio using the sponsored funds. The class objectives are to 1) foster relationships between PSU and the sponsors, 2) provide a practical learning experience and 3) to make a return that exceeds a set benchmark. This year, Portland State University came out on top with the D.A. Davidson account, competing against 20 other schools. From January through April, the account was ahead with a 34.7% return, but since has been neck and neck with the University of Utah for first place. The final results will not be revealed until August 31st.

With the D.A. Davidson account, Portland State University is rewarded 50% of the excess of the initial investment if the fund reaches returns over 5%.  When asked what contributes to the students’ success, former class instructor, Professor Settle, says “that is the secret everyone wants to know.” He at first mentioned how the Efficient-Market Hypothesis would make it impossible for any person to routinely perform better than the market, but with the students’ success year after year it’s hard to say it is pure luck. Professor Settle thinks that because the class is made up of students, they have more leeway to go against the crowd, avoid closet indexing and make decisions that challenge the traditional way of investing. Even when considering that the class has the highest “fund manager” turnover, usually considered a risk when searching for a firm, the portfolio still out performs.

Or the success can be attributed to the in depth analysis conducted by each student on the 2 to 4 companies of their choice and their objective analyses. Whatever the secret may be, Professor Settle is always impressed with how the students challenge each other in class.

What do the sponsors have to say about the students’ success? As professor Settle said, “The sponsors are all pleased and some mangers that are part of the CSA society are always a bit surprised.  One time Fred Dickson, the head researcher for D.A. Davidson, attended a student presentation and came away saying it was one of the best presentations he had ever seen.” Although Professor Settle will retire this year, his colleague Rick Watson will continue to co-teach the class with the newly appointed professor, Dr. Piman Limpaphayom.