Investing in the Future

Three student-run investment groups at Lehigh are bridging the gap between the classroom and the real world with their management of approximately $420,000 in Lehigh endowment funds. And they’re getting feedback from a significant source: Lehigh’s Chief Investment Officer Kristin Agatone.

“The main goal is to enhance the learning opportunity for the students,” said Agatone, who began working with the students after joining Lehigh in 2016. “If they continue on this road, they’re going to have someone like me asking questions. Being able to respond to that and articulate perspectives is really important.”

The students manage the Thompson International Portfolio, valued at about $32,000; the Dreyfus Fund, which has two subgroups and a combined value of $287,000 and the Investment Management Group (IMG), valued at $100,000. While the IMG is an investment club, the other two stock portfolios are managed by selected students who receive one credit per semester.

“They manage real money in real time,” said Vijay Singh, the professor of practice in finance who oversees the groups and helps guide them in their well-researched pitches to buy or sell stocks, and take other positions. The groups also now have the opportunity to make presentations three times a year to Agatone, who oversees strategic management of Lehigh’s endowment fund, currently valued at about $1.2 billion. Agatone also has offered to be an ongoing resource for the groups.

“Our students get this unique opportunity to present to Lehigh’s chief investment officer,” said Nandu Nayar, chair of the Perella Department of Finance. “It’s not every university that is lucky enough to have the CIO participating with the students. Our students are thrown into the deep end of having to present to a very knowledgeable CIO who routinely reviews presentations from top-tier asset managers. Being put through a similar grilling process that the professionals endure is what makes our students well-seasoned and able to hit the ground running upon graduation—surely a great advantage for our students in the employment market.”

At a presentation inside the College’s Financial Services Lab, Agatone gently questioned the students about the processes they followed in making investment decisions, how they managed their teams and how those graduating would pass along their knowledge to new students. She also asked about metrics and encouraged additional analyses.

“That’s helping them to, hopefully, take the work that they’re doing to the next level, to increase the depth of their work,” said Agatone. “If they want to keep going in finance, and in particular asset management, they’re going to have somebody like me asking questions and having them be accountable. That’s going to be the nature of the job when they graduate from Lehigh. The goal is, with some of the questions I ask and what I push them to think about, to be better informed.”

And if the investments don’t perform well? “That’s part of the learning,” Agatone said, “and it’s to be expected at some point. It’s really a learning opportunity for them. That’s the goal.”

Alexander Fuchs ’17, who helped manage the Dreyfus portfolio for three years before taking a job as a first-year analyst with Bank of America Merrill Lynch, said Agatone’s feedback was constructive and ultimately helped him better prepare for interviews that led to his job.

“It’s great to hear, from her perspective as someone who does employ fund managers, what she’s looking for, specifically, beyond the returns,” he said.

Fuchs knew he wanted a career in financial services when he first sought a spot on the Dreyfus team. “There’s really no better way to practice managing money than to actually do it,” he said, adding that members are expected to evaluate companies and make at least two stock pitches per semester. “With these clubs, you actually get swings at the plate.”

Fuchs said he learned to be creative in assessing which investments to pursue—he stayed on top of current worldwide events and they helped inform his decisions—and  to be disciplined, such as when to sell. “You come up with an idea, you do a modeling, you do the math, and sometimes you’re wrong,” he said. “It’s something you don’t get in the classroom. You need to practice for the real world, admitting [when] you’re wrong, and trying to sell and minimize your losses.”

Fuchs said the portfolio has been doing well. “We underperformed the benchmark over the last quarter, but it’s pretty slight,” he said. “We do use what the professionals use as their benchmark. Very few of them beat it anyways. So we’ve always been pretty competitive.”

A percentage of portfolio values helps to fund scholarships and Lehigh’s Financial Services Lab, which supports data and software for students to gain a better understanding of the financial world through theory, practice and research.