TVA Invests in Futures‚ One Student at a Time

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.

K Van Rensselaer TVA Investment Challenge

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.

Student Investors Produce Solid Return for TVA in 2014

KNOXVILLE, Tenn. – University students in the Tennessee Valley Authority’s Investment Challenge Program produced a double-digit return on their stock portfolios for the federal corporation in 2014.

“The students exercised diligence and responsibility managing their investment portfolios,” said TVA Vice President and Treasurer Tammy Wilson. “They produced solid results for TVA and gained valuable experience for what we hope will be rewarding careers within TVA’s service territory.”

The return for the total program, involving student teams from 25 colleges and universities in the seven-state TVA service area, was 10.53 percent. Three teams exceeded the Standard & Poor’s average and will receive performance awards. The winners and their returns on investment are:

  • Austin Peay State University, 22.67 percent
  • University of Kentucky, 17.83 percent
  • Alabama A&M University, 16.33 percent

TVA’s Investment Challenge Program is a partnership between TVA and the universities that provides a unique hands-on experience in financial asset management for the students and performance-based awards the universities can use to enhance their business school resources.

Student teams actively manage real stock portfolios for TVA, designing long-term investment strategies and selecting investments under the guidance of faculty members and within investment guidelines established by TVA.

Thousands of students have participated in the program since it began in 1998, and a number of them have been hired by TVA and other employers in the region after graduation.

TVA initially provided $1.9 million from its long-term asset retirement funds to start the program. Through 2014, the program has grown to over $13 million.

The other participating universities are: Belmont University, Christian Brothers University, East Tennessee State University, Lipscomb University, Middle Tennessee State University, Mississippi State University, Mississippi University for Women, Murray State University, Tennessee State University, Tennessee Tech University, Trevecca Nazarene University, Union University, University of Alabama at Huntsville, 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.

The Tennessee Valley Authority is a corporate agency of the United States that provides electricity for business customers and local power distributors serving 9 million people in parts of seven southeastern states. TVA receives no taxpayer funding, deriving virtually all of its revenues from sales of electricity. In addition to operating and investing its revenues in its electric system, TVA provides flood control, navigation and land management for the Tennessee River system and assists local power companies and state and local governments with economic development and job creation.