It's become very clear over the last two years that economists, investment experts and academics can't always predict the behaviour of financial markets — so imagine being a student and trying to get a handle on the best money-handling moves.
Witness the recession we've been crawling out of in recent months. The economic fall was swift and sudden, throwing the financial services industry and investors into damage-control mode.
MBA schools have long been preparing students for such problems in the business world, with many still cutting their money-managing teeth on virtual portfolios and imaginary situations.
But many universities — including McGill and Concordia in Montreal, McMaster in Hamilton and Simon Fraser in Vancouver — also offer programs that get students thinking about, preparing for and acting on real-world financial and investment issues.
At McGill's Desautels Faculty of Management, one of the few schools in North America with a working investment fund that attracts clients outside the university, there are six MBA students as well as 10 senior and 10 junior Bachelor of Commerce students in the Investment Management Program (IMP).
They get involved in every aspect of handling clients' investments in two funds: one equity and one fixed-income, with each holding about $1-million. The clients are high-net-worth ones, mostly alumni but also financial institutions, in Quebec and Ontario.
"Real clients, real compliance, a real firm, real funds, real investment process — everything the students do is what is done in the real world," says Alex King, the faculty's development director, who as head of investor relations also recruits clients.
Students, who took academic courses in the fall term and started the investing program in January, take on different roles in the fund company — including as analysts, asset strategists, macro managers and risk managers. They collaborate in daily meetings, go through the investment process and pitch their suggestions to the chief investment officer, Ken Lester, a discretionary money manager and CEO of Lester Asset Management, who handles the stock and bond trades recommended by the student analysts.
The IMP program was conceived in 2006, and it took some time to get all the legalities and regulatory requirements in place to get it off the ground the beginning of this year, says Mr. Lester, who believes in letting students take charge, including calling in the trades themselves.
The economic turmoil of the last couple of years is having its impact on student investment handlers, who learn how to ride the wave, and when to exercise caution, he says.
"As money in Desautels has been coming in, students have been hesitant to invest it … there is a bit of nervousness and justifiably so … I tell them that's a perfectly reasonable position to take right now. If my students wanted to invest more eagerly, I would agree on that too — but they have to justify everything."
Many students say working with real portfolios gives them a distinct advantage with prospective employers.
John Tarraf, 28, was born in Beirut, Lebanon, came to Canada as a teenager, earned his B.Comm degree and worked four years at RBC in Montreal before entering the Desautels program in September.
"The program gives me, as an MBA student, the opportunity and chance to take part in a professional investment management firm that provides real services to real clients and manages real money, and reflects the prophecies in investment management firms outside university," says Mr. Tarraf, who handles equities work in the endowment fund.
Michal Marszal, 27, who moved to Canada from Poland, is a 2008 McGill medical school graduate who wants a career at a health-care investment firm.
Also working on the equities side of Desautels, he keeps his eye on investment opportunities in the biotechnology and medical devices industries.
