Finance:Lemma Senbet Fund
The Lemma Senbet Fund is the largest student managed investments fund by endowment in the U.S. It's offered as a limited-enrollment [1] year-round experiential learning course to top tier undergraduate students from the Robert H. Smith School of Business at the University of Maryland (UMD).[2] Each student in the fund gets to manage around $1.8 million as of 2022.
Founding
The fund, named for Lemma Wolde Senbet, the William E. Mayer Chair Professor of Finance at the Smith School of the University of Maryland, was founded in 2006 with initial capital of US$50,000 from the school's endowment fund.[1][3][4]
Governance structure
The investment management team consists of 12 undergraduate students chosen through an interview and presentation process designed to simulate the hiring process of investment banking firms.[4] The team consists of 2 portfolio managers and 10 equity analysts each dedicated to a specific industry sector: consumer products (discretionary), consumer products (staples), energy, financial services, healthcare, industrials, information technology, materials, telecommunications, and utilities. Each sector analyst pitches approximately 4 stocks per year, and must persuade all 12 members (not just a majority) of the investment team to buy.[5] The student investment management team uses Bloomberg Professional Services running on Bloomberg Terminals to conduct in-depth financial analysis, manage the asset portfolio, and execute security trades.[6] The students are unpaid, and do not share in the fund gains nor receive distributions.
Investment strategy
The long-term performance goal of the Lemma Senbet Fund is to outpace appreciation of the S&P 500 Index on a risk-adjusted basis. Historically, the fund has adopted a top-down investment approach that is driven by Economic indicators, then Industry trends, and finally individual Company performance (EIC). Most asset instruments are long equity positions.[2] Specific stock selections are based on a combination of fundamental analysis and technical analysis valuation techniques under the Growth at a Reasonable Price (GARP) model.[7]
Fund growth
Since founding in 2006, even after annual distributions the Lemma Senbet Fund has grown 18-fold from $50,000 [1] to $1.8 Million (fiscal year ended Dec 31, 2022).[7]
Fund Distributions
The Lemma Senbet fund pays a 5% distribution to the UMD Deans Office each year. In 2017, this distribution amounted to $37,729.[7]
References
- ↑ 1.0 1.1 1.2 "Smith School Launches $50K Undergraduate Investment Fund". College Park, Maryland, USA: University of Maryland. November 7, 2006. https://www.rhsmith.umd.edu/news/smith-school-launches-50k-undergraduate-investment-fund. Retrieved March 26, 2018.
- ↑ 2.0 2.1 "U of Maryland's Undergrad Fund Earns 'Street Cred'". Wall Street, New York City USA: TheStreet. November 15, 2007. https://www.thestreet.com/story/10390357/1/u-of-marylands-undergrad-fund-earns-street-cred.html. Retrieved March 26, 2018.
- ↑ "Lemma W. Senbet The William E. Mayer Chair Professor of Finance, Director of Center for Financial Policy". University of Maryland. http://scholar.rhsmith.umd.edu/lsenbet/home.
- ↑ 4.0 4.1 "University Fund Preps Students". College Park, Maryland, USA: The Diamondback. December 3, 2006. http://www.dbknews.com/archives/article_00d34a71-7e0c-500e-805b-7a09aa07ab55.html. Retrieved March 26, 2018.
- ↑ "Market Master's". The Washington Post (1301 K Street NW, Washington, D.C., USA: Nash Holdings LLC). May 11, 2008. https://www.washingtonpost.com/wp-dyn/content/article/2008/05/10/AR2008051000197.html. Retrieved March 26, 2018.
- ↑ "Wall Street Tools Give Edge To Smith Students". College Park, Maryland, USA: Robert H. Smith. July 10, 2014. https://www.rhsmith.umd.edu/news/wall-street-tools-give-edge-smith-students. Retrieved March 26, 2018.
- ↑ 7.0 7.1 7.2 "Annual Report of Lemma Senbet Fund". College Park, Maryland, USA: University of Maryland. May 2, 2017. https://www.rhsmith.umd.edu/files/Documents/Programs/Undergraduate/SenbetFund/2017/2017-senbet-fund-eoy-report.pdf. Retrieved March 26, 2018.
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