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Simon Fraser and the University of Saskatchewan are among Canadian schools that let MBA and commerce students invest real money in the markets. (Chad Anderson/Getty Images/iStockphoto)
Simon Fraser and the University of Saskatchewan are among Canadian schools that let MBA and commerce students invest real money in the markets. (Chad Anderson/Getty Images/iStockphoto)

BUSINESS SCHOOL NEWS

Real stock market experience teaches students humbling lessons Add to ...

The Globe’s biweekly business-school news roundup.

At some Canadian business schools, students learn to manage other people’s money long before landing their first job.

They do so through a student-run investment fund, fast becoming a staple of business schools in either for-credit courses or extracurricular activities. Increasingly, these funds use real money (from donors), giving students real-life exposure to the discipline of trading stocks and bonds for a client.

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Simon Fraser University’s Beedie School of Business in Burnaby, B.C., selects 18 or so undergraduates every year to manage a $5-million portfolio of Canadian equities, bonds and cash, which represents a portion of the university’s total endowment. The Beedie Endowment Asset Management Fund, named for the family that gave $5-million to open the fund in 2011, is believed to be the largest student-run fund in Canada.

As in a professional setting, students are expected to make research-based decisions, work in teams and report quarterly to an oversight body. The Beedie fund limits investments to a mix of 60 per cent Canadian equities and 40 per cent fixed income, with an additional requirement for diverse holdings of larger-sized Canadian companies.

As in real life, students learn that markets do not always go up.

“One of the most important things you can learn is that the market always humbles you,” says Connor Buss, a fourth-year student at Beedie and a member of the management fund team for two years. “You can be so certain and confident about something, but at the end of the day there is always a reason why something is priced the way it is.”

Beedie finance professor Peter Klein, faculty supervisor for the fund, says “the goal is to have as realistic an investment experience as we can possibly provide.” A former investment banker, he says student-run funds are a “newish phenomenon,” with the focus on equipping participants for a likely career in finance. “It’s good if we can give them an opportunity to apply some of that critical thinking in something that will be relevant to their employment.”

Mr. Buss says his fund experience paved the way to an internship last summer with a major Canadian bank in Vancouver. Later this year, he joins the same institution for a full-time job in investment banking in Toronto.

Like Beedie, the Edwards School of Business at the University of Saskatchewan in Saskatoon established its student-run investment portfolio with a gift from a business leader. Since the initial gift of stock in 2011, others have contributed to the fund that now stands at $775,000.

But unlike Beedie, Edwards designed its student-run portfolio as the centrepiece of a for-credit course for interested third- and fourth-year students.

“The object is to bridge theory and practice,” says finance professor George Tannous. Working within ground-rules set for the fund, students work in teams to analyze equities and fixed income assets. During the course, the entire class votes on potential changes to the portfolio without requiring approval from the professor.

Participating students may – or may not – head for careers in finance, but say they have acquired skills of value whatever their future employment.

“You are always working in a team and trying to manage with other teams,” says fourth-year commerce student Kyle Dormuth, who is considering a career in agriculture.

At Edwards, he has learned about markets by working with simulated and real-life funds run by students. “Fake money is just a number on a computer screen,” he says. “Real money is somebody’s donated money and it is the university’s funds that have been entrusted to us. There is a lot more that you are risking.”

GMAT turns 60

In 1954, four Canadian universities (Toronto, Alberta, McGill and Laval) took part in a new initiative – an admission test for graduate business studies developed by major schools in the United States.

What became the graduate management admission test now is administered in 112 countries and accepted at more than 6,000 graduate management programs internationally. The Graduate Management Admission Council, which delivers the test, estimates nine million exams have been administered over the past 60 years.

Toronto-born David Wilson, who retired last year after 18 years as chief executive officer of GMAC, recalls the pressure he felt when he took the test in the fall of 1963, as a student at Queen’s University. The pressure, however, lay elsewhere than the academic evaluation.

The exam was held in Ottawa on the same day as a home football game in Kingston, creating a scheduling conflict for Mr. Wilson. He was the university’s pipe-band drum major.

He drove two hours to Ottawa and wrote the exam in his kilt before hurrying back to Kingston to rejoin the pipe band at half time of the football game. “It was the most important thing at the time,” he recalls.

His GMAT score earned him a place in the business program at the University of Berkeley, a school recommended by his Queen’s professor.

Rising B-school stars recognized

Two Canadian business professors are among the “top 40 under 40” on an international list of young academics on the rise. The list was published this week by Poets & Quants, a U.S. blog on business schools.

“These uncommon profs have excelled in research while overcoming the green-professor label in the classroom,” says the blog, which received nominations from business school officials, faculty, students and alumni.

The Canadians are Markus Giesler, 37, a marketing professor at York University’s Schulich School of Business in Toronto, and Nina Mazar, 34, a behavioural economist and marketing professor at the University of Toronto’s Rotman School of Management.

Prof. Giesler carries out research on entertainment and high-tech marketing and tours with his rock band in Europe in summer, according to the blog, which also cited Prof. Mazar for her research on moral decision-making that was presented to the European Commission and Canada Revenue Agency.

Follow Jennifer Lewington and Business School News by subscribing to an RSS feed here.

Contact Jennifer at jlewington@bell.net.

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