When you think of professional money management, the image that comes to mind may be expensive suits on Wall Street. But here in the Tennessee Valley, a new class of investor is being cultivated: young, smart business students from 25 universities in TVA’s seven-state service area—a group that regularly outperforms the S&P 500.
Student investors in the Tennessee Valley are young, smart and— through TVA’s Investment Challenge Program (ICP)— have outpaced the S&P 500 since the program began in 1998. Next month, TVA will recognize these student investors at a ceremony in Nashville, Tennessee, where the company will announce which team earned ICP top honors.
“TVA’s Investment Challenge Program provides real-world, hands-on financial asset management experience that can’t be simulated in the classroom,” says Dr. Kristen Van Rensselaer, professor of finance at the University of North Alabama, who was one of the founding ICP professors and has been a program coach for nearly 18 years.
Dr. Kristen Van Renssalaer Holds the ceremonial check from 1998 when TVA presented seed money to begin the Investment Challenge Program at the University of North Alabama.
The ICP began when universities and TVA came together to look for ways to enhance business programs at the university level.
For many college investing courses, students pick and track stocks only through simulated portfolios. Some students take these investing exercises seriously, while others do not because there is no “real money” in the game.
“We asked TVA to help us take our business curriculum and students’ experiences to the next level,” Van Rensselaer recalls. “We needed to develop a program that would apply real-world pressure on our students, and TVA made it happen.”
Students who participate in the ICP actively manage real portfolios for TVA by designing and implement long-term investment strategies under the watchful eyes of their professors while following TVA’s guidelines. The money students invest sits in TVA’s Asset Retirement Trust Fund.
“The ICP is a natural fit that benefits both students and TVA,” says TVA vice president and treasurer Tammy Wilson. “The program is a smart TVA investment strategy that diversifies the financial management of the trust fund, while giving students a ‘wow’ moment to develop the skills needed to compete in the workforce.”
Van Rensselaer remembers how her students agonized and debated for weeks over which stocks to buy or sell. “We were looking at adding company X or company Y to our portfolio,” says Van Rensselaer. “Students researched each company and presented reports similar to what any CEO would expect in a board meeting. I was amazed how detailed and professional the analyses were.
“While students only manage a small portion of the trust fund, the experience they receive is priceless,” she continues. “They treat the ICP as if they are managing the client’s entire investment portfolio, and, more importantly, they say they are proud to manage money for the people of the Tennessee Valley.”
Not only do the people of the Valley benefit from the students’ hard work, so too do the business schools students attend. Similar to professional money managers, universities that outperform the S&P 500 are eligible to receive up to 20% of the money earned with a total cap of 2% of funds under management.
Student teams have earned nearly $1 million in performance awards for their schools over the life of the program—awards that universities use to purchase research tools, enhance classroom facilities and/or seed student scholarship funds.
Participating ICP universities are: Alabama A&M University, Austin Peay State University, Belmont University, Christian Brothers University, East Tennessee State University, Lipscomb University, Middle Tennessee State University, Mississippi University for Women, Mississippi State University, Murray State University, Tennessee State University, Tennessee Tech University, Trevecca Nazarene University, Union University, University of Alabama at Huntsville, University of Kentucky, University of Memphis, University of Mississippi, University of North Alabama, University of Tennessee at Chattanooga, University of Tennessee at Knoxville, University of Tennessee at Martin, Vanderbilt University, Western Carolina University and Western Kentucky University.