Class to Invest $500,000 in CSUN Foundation Funds

Students in Finance 437 next semester at Cal State Northridge will be getting more than chalkboard lectures on the finer points of capitalism.

It’s not mentioned in the course outline, but the class for the first time will get $500,000 to invest.

CSUN President Blenda J. Wilson and the rest of the CSUN Foundation trustees voted Friday to allow senior finance students to invest $500,000 of the foundation’s nearly $10-million endowment fund.

The fund is now controlled by four professional investment managers who during the 1991-92 fiscal year made returns of just under 12%. The foundation’s former investment manager sustained investment losses the previous two years, records show.

Of course, the student investments will be strictly monitored and limited to trading in securities, CSUN officials said. There will also very likely be rules requiring the students to diversify their investments to minimize the risk of losses.

But despite that, students in the senior-level honors class will be doing the same work as professional investors. As a group, students in similar college investment classes--using real bucks--have safely guarded their money and in many cases earned a handsome return.

“None of the 23 colleges and universities doing this have lost funds,” said Bill Jennings, chairman of the CSUN department of finance, real estate and insurance.

In fact, students at Ohio State University have done even better than that, earning returns of more than 20% over the past two years, a rate that outstripped most professional investment groups, Jennings said.

“The students probably spend a lot more time on this than the professionals,” said Don Queen, executive director of the nonprofit CSUN Foundation.

The foundation, which also owns and operates the retail and food concessions at the campus of 29,000 students, spends its surplus money on athletics, student and faculty projects, scholarships and other campus expenses not covered by state funds.

Besides sales revenue, the foundation also spends a portion of its investment return each year.

One of the foundation’s student trustees, Michael Whitehead, said he was a little nervous about entrusting such a large sum to the class.

“If I was playing with someone else’s money, I might be freer in my investments,” Whitehead said.

But Jennings said the experience of other universities conducting similar classes is just the opposite. Students tend to be fairly conservative in their investments.

Besides, Jennings, who will teach the class, said he will hold veto power over the investments “to make sure they are not going to do anything strange out there.”

Wilson, who raised the student investment idea, said she believes students will benefit from the experience while the foundation will be risking only a small portion of its total endowment fund.

Students will not get graded on the performance of their investments, which are often affected by global and national events, CSUN officials said.

But even though they are students, they still must adhere to the bottom line. “If our investment managers don’t do well over time, we fire them and get new ones,” Wilson said.