Sunday, April 5

UCLA must take stock of its education practices, create student-run investment fund


Economics students at UCLA learn a lot about personal finance but would be better served if they were able to manage an investment fund mandated by the university. The practical application of real-time management can provide them invaluable career experience. (Kanishka Mehra/Assistant Photo editor)


Tuition is only the baseline fee for UCLA students looking to buy a practical college experience.

And for some students, UCLA’s existing investment funds could be part of that experience.

For Bruins looking to break into finance, classes on economics and business management are only a starting point – especially at a university without an undergraduate business school. But the real-world benefits of investment mean students are looking for more when it comes to financial education.

Investing can help students learn personal finance as well as motivate students to read financial news, follow the market, understand financial concepts better and ace internship interviews.

But most college students don’t have the money to trade stocks.

Luckily, UCLA does. The university should establish an investment fund by allocating a certain portion of the UCLA endowment for undergraduate students to manage. The fund, and its gains or losses, would belong to UCLA – which offers a low-risk path for students to shadow the world of financing. Students can participate in stock research, evaluation and decision managing with the supervision of investment professionals or appointed staff members – an approach that is already available at other top universities nationwide.

And the infrastructure for such a fund already exists.

UCLA’s endowment is actively managed by the UCLA Investment Company, but the program only allows for a small number of interns per year. Only MBA students have access to the UCLA Anderson Student Investment Fund, but resources and practical learning experiences are denied to business-oriented undergraduates.

Jennifer Yung, a first-year economics student in the Bruin Hedge Fund, a student-run club, said application of financial theories can be difficult for students.

“There should be more opportunities to use these theories in the actual stock markets,” Yung said.

A UCLA-owned fund should consist of financial training, as well as practice in which students can help make real-life investment decisions. The recently established Value Investing Concentration in the Department of Economics illustrates how effective investment education can be.

But practical application in the real-life stock market is still lacking.

Humberto Merino-Hernández, the program manager for the Value Investing Concentration in the Department of Economics, said that each year there is a strong demand from the student body to learn investment management.

“The idea of (a) student-managed fund definitely works; it definitely has its merits,” Merino-Hernandez said. “We definitely want to explore that at least in our program in the future.”

Any investment in the market comes with risks.

UCLA’s endowment is handled by the UCLA Investment Company, a subsidiary company of the UCLA Foundation. If undergraduate students could collaborate with the UCLA Investment Company to help professionals on research and pitch investment ideas, then students could effectively minimize personal financial risks.

“It’s really for us to give students the tools, the framework and the knowledge that you won’t worry much,” Merino-Hernández said. “Ideally, the position you are in will have some upside to protect you in the case of market downturns.”

Many schools, such as the University of Connecticut and USC, have established student-managed funds using their endowments to enrich students’ professional development. Bruins will be up against these students in the job market, but UCLA is currently putting them at a disadvantage when it comes to practical experience.

And there isn’t any lack of enthusiasm from students.

Luke Li, a fourth-year business economics student and a portfolio manager of Bruin Value Investing, a student club, said that investing is an important skill for students who want to start a career in finance.

“I definitely think that if you are going to be (in) the financial field, investing is a good skill to have,” Li said. “The earlier you start, the more time you have to build experience.”

Investing benefits not only students pursuing a career in financial industries but also anyone who wishes to learn more about personal finance or save for retirement. Since stocks or bonds will return interest in a compounding way, the earlier one starts to invest, the more wealth they can accumulate. Top investment professionals, such as Warren Buffett, started to trade early in their careers.

Conner Ching, a second-year statistics student who invests individually, said that investing was the first time he started to earn money.

“It is good for me to start investing early,” Ching said. “If you are someone who does not have the money to invest right now, (learning how to invest) might be more beneficial in the long run when you do earn money.”

Clearly, there are already several student clubs at UCLA dedicated to learning finance. However, the school should not leave students out to dry when it comes to an increasingly important skill – especially when their peers have access to investment resources.

And if most Bruins do not understand stocks’ power, they might not have the security blanket to help them overcome future financial difficulties.

“People make decisions that don’t matter to them,” Li said. “A big part of investing is your discipline in the face of fluctuations in the market. You really have to experience real money going up and down.”

Some may argue that virtual stock simulators could serve as decent practice to offset the risks of using real money.

But virtual stocks lack the realities of investment and lead to more reckless investment decisions because of the lack of consequences. Virtual stock simulators cannot train students on how to navigate the unpredictability of real market volatility.

Learning is all about making mistakes – but for student investors, mistakes can mean long-term financial consequences.

And if UCLA has a chance to help students catch their big break without going broke, they should.


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