Recognizing the need to give students real-world experience as well as the ability to apply what they've learned in class about asset management, York University this year created a student investment fund.
Using $60,000 donated by alumni and others, a team of 15 to 20 student analysts take a value investment approach to the portfolio, seeking to achieve a positive return while minimizing risk.
For 21-year-old Percil Parikh, the York University Student Investment Fund's chief investment strategist, using actual money is crucial.
"It gives students a real understanding of the fact that their decisions have real-world implications. It also aligns interest and creates legitimacy being able to say I worked in the fund and my ideas actually were carried through and we spent thousands of dollars executing this trade," says Mr. Parikh, who is about to enter the fourth year of his bachelor of business administration at York's Schulich School of Business.
Other schools across Canada have similar funds managed by students. The Queen's University Investment Council manages a $700,000 portfolio, while the Ivey Business School at the University of Western Ontario has a $1-million fund that is invested based on student recommendations.
At York, the fund is split into six industry groups, each headed by an analyst, Mr. Parikh says. Each semester, participants deliver stock pitches that are the culmination of six to eight weeks of investment research. The fund is actively managed from September through April and passively managed during the summer months.
Apart from the positions of chief investment strategist and portfolio manager, the rest of the team is dissolved each year, and Mr. Parikh estimates that 60 to 70 undergraduate students will vie for the chance to be part of the group.
Two of the biggest benefits to participating in the fund are networking opportunities – Mr. Parikh, for instance, is spending the summer interning at Canada Pension Plan Investment Board in Toronto – and the experience gained.
"It accelerates the learning process," he says. "It immerses you in an environment that's very practical and hands-on."
Many of the students also take part in stock-picking competitions around the world, where they can win cash prizes and showcase their skills in front of other schools and industry professionals.
Mr. Parikh and others attended the University of Waterloo's fourth Stock Pitch Competition last year, where they finished second, taking home a $600 prize. He also drove to Harvard University for the Massachusetts school's own competition.
"Can you demonstrate that you have superior qualitative and quantitative analysis, [and can do] fundamental investment research?" he says. "Both in terms of a learning perspective and in terms of a networking perspective, it's helpful."
Learning opportunities at these competitions are tremendous, says Craig Geoffrey, who recently joined the faculty at the University of Toronto's Rotman School of Management after serving as the student investment-fund faculty adviser at the University of Waterloo.
Giving presentations helps students develop "those soft skills that everybody likes to talk about: poise, confidence, the way they speak, answer questions on the fly," Mr. Geoffrey says.
He was a mentor to the Waterloo undergraduate stock-picking team last year, which won the prestigious CFA Institute Research Challenge in Chicago, the first Canadian winner in the competition's 10-year history. The five-student Waterloo team won $10,000 and defeated more than 5,000 students from 1,000 universities around the world with its report on the merits of investing in a particular company and the defence of its choice to a panel of industry experts.
"One student has graduated and he's heading off to investment banking in New York," Mr. Geoffrey says. He is sure the others "will end up in front-office finance somewhere."
Sebastien Betermier, a finance professor at the Desautels Faculty of Management at McGill University in Montreal, calls the competitions "varsity academics."
"The level of learning that goes along the way is to me greater than most of the classes that they'll take," he says. Desautels has participated in competitions as far away as Norway and New Zealand.
Two years ago, the Ivey Business School inaugurated a competition that one professor says is of a calibre found at only a few schools in North America.
The Ben Graham Centre's International Stock Picking Competition offers $17,500 in prizes. The competition is a two-part event, with a 10-page report making up the first stage. The top three entrants are then invited to Toronto to put on a presentation in front of a panel of global value investors.
The event is on par with contests run by the University of Michigan, Cornell, Duke and UCLA, says George Athanassakos, a professor of finance and the Ben Graham Chair in Value Investing at Ivey.
The event has benefits for all, including the panel of industry players.
"One motivation for them to participate in this competition is to see students in action and to see perhaps who might be a good fit for their own organization," Dr. Athanassakos says.