Finance students win 2009 TVA Investment Challenge
Kim Chaudoin |
Team outperforms the S&P 500 return by nearly 36 percent
Each year Lipscomb students participate in the TVA Investment Challenge, a program that doles out investment funds to 25 universities in the Tennessee Valley Authority’s region – including Mississippi, Alabama and Georgia and Kentucky -- and allows students to act as portfolio managers for those funds.
Lipscomb competed against 24 universities in the southeast, including Mississippi State University, the University of Kentucky, the University of Tennessee-Knoxville, Western Kentucky University and Vanderbilt University. Western Kentucky finished with the second-best finish with a 45.62 percent return. The average return of the participating universities was 31.88 percent.
“I am extremely proud of the hard work of our student portfolio managers. We led the competition almost ‘wire to wire’ this year, taking the lead in February and never losing it,” said Jeff Jewell, associate professor of business administration.
Jewell said this program provides a valuable learning experience for students.
“Students experience the pressure of making real money decisions. They learn to use the same analytical and decision making techniques that professional money managers use. They must work independently and have accountability for their research and decisions. This project is as close as we can get in an educational environment to giving our students real world experience. It is extremely valuable in giving them insight into the world of professional investing,” said Jewell.
Lipscomb received $400,000 to manage when it joined the program in 2003. TVA puts certain restrictions on the composition of the portfolios and monitors the performance, but other than that the students make all of the decisions about what and when to buy and sell, said Jewell.
Each year the universities with the best financial returns win cash prizes. In 2009, Lipscomb students’ performance earned a prize of $8,602 from the TVA. The future profits will head back into the TVA’s Nuclear Decommissioning Trust Fund. In 1996 the TVA Board established this fund to pay for the potential decommissioning of TVA’s nuclear units. Two years later, to diversify the financial management of the trust fund, TVA allocated $1.9 million to create the TVA Investment Challenge Program.
This year Lipscomb also won the performance title for "Rolling 3-year Performance." Lipscomb’s total return over the last three years is 1.94 percent, compared to the S&P 500 return of -5.63 percent. The average return of the 24 schools in the competition over the last three years was -4.14 percent.
Last year marked the 11th year of the TVA Investment Challenge. Lipscomb entered the competition in 2003. The Lipscomb TVA Team has previously won performance awards in 2003, 2004, and 2007. This is the first year Lipscomb has won the competition. Since entering the competition seven years ago, Lipscomb teams have earned an average annual return of 11.30 percent. This compares very favorably to the S&P 500 return over that same period of 5.52 percent. Lipscomb has beaten the S&P 500 benchmark five out of seven years since entering the competition.
Business students who have worked with the portfolio at some point during 2009 are Derek Clark, Tyler Lewis, Freddy Quiteno, Luke Ficken, Michael Aulisio, Drew Dixon, Ross Keisling, Melissa Mohl, Alex Dampf, Sarah Stone, Peter Menke and Matt Bowling.