Financial markets are a complicated puzzle, shaped by uncertainty and risk and the behavioural biases that can influence investment decisions. Determining whether it's prudent to buy stock in a particular company is challenging, even without the onslaught of tariffs and global conflicts injecting additional turmoil into the picture.
Learning how to navigate this realm is not easy, but the Sprott Student Investment Fund (SSIF) at Carleton University has taken the most realistic pedagogical approach possible and the results speak for themselves.
Since the SSIF was established nearly 20 years ago, students who manage the fund have grown initial contributions from the Sprott School of Business endowment fund totalling $550,000 into more than $3.3 million in assets a cumulative average return of about 17 per cent, exceeding the benchmark they're aiming to beat. The fact that they're investing real money is the key to their financial education, as well as a boom for the university's bank account.
Sprott School of Business Dean and SSIF faculty advisor Howard Nemiroff
"It's one thing to simulate investing, but understanding that you are managing other people's money for real, and the fiduciary responsibility that comes with that, is a crucial part of the learning process," says Sprott Dean and SSIF faculty advisor Howard Nemiroff, who started the fund in 2007.
"These students are contending with risk and must be accountable for their decisions. They meet with Carleton's investment committee regularly to defend their portfolio, like other asset managers have to do. They're being asked the same tough questions they would face at financial firms on Bay Street or Wall Street.
"This not only prepares them for job interviews and careers, it teaches them how critical it is to be responsible when you're managing somebody else's money."
Professional Fund Structure
The SSIF's structure mirrors that of a professional investment fund. The team is comprised of roughly 20 portfolio managers, sector managers, equity analysts, marketing analysts and interns, with early-year undergraduates typically rising through the ranks into leadership positions. The majority are concentrating in finance, with a few Master of Finance and MBA students also joining.
Specific stocks are discussed at weekly meetings and decisions are made based on the fund's guiding philosophy maximizing the value of its assets over the long term by building a portfolio of wealth creating firms and robust environmental, social and governance (ESG) considerations.
Students learn how to parse what Nemiroff calls the "macro factors" that impact markets, such as the relationship between housing starts and copper prices, or extreme volatility in the tech sector.
"Without exception, something happens that we never thought would happen," he says, "and you always have to be prepared for what you're not prepared for."
But perhaps the biggest lesson for students is that the client's needs trump their own. "If your client wants to divest of a particular type of stock, it's critical for the advisor to check their politics at the door," says Nemiroff. "Understanding that the role of an advisor is to identify opportunities that adhere to the client's philosophy and then execute on those opportunities gives our graduates the insights needed to secure great jobs in cities like Toronto, London, New York and Hong Kong."
Research and Critical Thinking
Morgan Combden, a third-year Sprott finance student and SSIF portfolio manager, is already eyeing a career in asset management and knows that her experience with the fund will help show prospective employers what she's capable of.
Starting as a first-year intern, her knowledge has evolved from sector-specific expertise to a broad, overarching perspective of portfolio performance. "As a long-term fund, we're trying to outperform average returns," says Combden. "When there's short-term volatility, our strategy is to reassess our holdings without reacting rashly to current events."
This experiential learning complements what she's studying in class, helping her develop valuable skills.
"Working on the fund makes us think more critically about the risks that are posed when you're proposing an investment, because there could be real consequences if it doesn't pan out," says Combden. "That enforces the need to dig deeper into your research."
As a woman in what remains a predominantly male field, Combden is also leaning into mentorship. She has benefited from the support of women SSIF alumni and encourages the next generation of young women at Carleton to follow their interests into finance.
"It can be difficult when you don't see representations of yourself," she says, "but that's why it's important to become those representations, to show it's possible to take advantage of opportunities in finance and be just as successful as men. It's a continual cycle of learning and collaboration."
