Sam Eckert oversees an equity fund that is beating the S&P 500 this year. But he isn't a professional portfolio manager, and neither are his colleagues.
Eckert is a rising senior and the investment committee chair of the University of Chicago's undergraduate investment club, the Blue Chips. It is one of many college clubs where teenagers and 20-somethings are learning about investing by managing tens or hundreds of thousands -- even millions -- of dollars in assets. In other words, there is more at stake than an econ test.
Young investors are often associated with cryptocurrencies and meme-stock mania. Investment clubs take a different approach.
"A lot of my friends seem to treat their account like a slot machine," Eckert said. "What we do is kind of the antithesis."
Investment clubs might not be as ubiquitous as Greek life or intramural sports, but they are fixtures at colleges around the U.S. -- big and small, public and private. Lafayette College's club says it is the oldest student-run investment club in the country, established in 1946 with $3,000 and now managing roughly $1 million.
Some clubs got started with donations from wealthy alums; others manage part of the university endowment. Students take on roles such as analyst and portfolio manager, designed to mimic professional investment firms. Members research companies, pitch stocks, make trades -- and debate everything from the trajectory of aluminum prices to whether a recession is imminent.
Graduating seniors have already seen quite a lot in their short investing careers. The market crashed during their freshman year as Covid-19 sent students home. Their sophomore year was a market boom. Junior year brought historic inflation, the most aggressive rate increases in decades and another downturn. Their final semester included a banking crisis. Many have learned to be OK with seeing a lot of red in their portfolio.
Data on how many investment clubs exist, or how much money they collectively manage, are hard to come by. But hundreds of students put their chops to the test at ENGAGE UIC, a yearly stock-pitch competition and conference hosted by the University of Michigan's club, Michigan Interactive Investments. Quinnipiac University also runs an annual conference with a competition for student-run portfolios. This year, students from more than 120 schools attended.
Admission into some clubs can be as competitive as the analyst recruiting process for Wall Street. Yale Student Investment Group accepts members at about the same rate as the school's undergraduate admissions office: roughly 5%.
The clubs often have support and supervision from faculty advisers or the school's endowment investment managers, and access to an engaged alumni network. At New York University's Stern Investment Analysis Group, portfolio team members bring final stock pitches to an oversight board whose members include finance professors and alumni now managing private-equity firms and hedge funds.
Most clubs abide by vanilla long-term equity investing principles. Rarely are they allowed to employ riskier plays like shorting stocks, trading options or using leverage.
Meetings can be intense. During stock pitches and portfolio updates, members relish poking holes in each other's arguments.
Alice Yu, a rising senior at NYU and president of the Investment Analysis Group, said she sometimes finds it more challenging to present investment ideas to fellow students than to the oversight board.
"My peers are some of my biggest critics," Yu said. "It prepares you extremely well to present in front of industry professionals."
For schools known as feeders for Wall Street firms, the investment clubs are well-trodden pit stops on the path to joining bulge-bracket investment banks. At other schools, they are meant to put students on more equal footing when applying for jobs.
Jessica Vittoriano joined the Investment Management Group at Baruch College, a public school in the City University of New York system, as a freshman and was chief executive this past semester. She is in the first generation of her family to be born in the U.S. and to attend college. Vittoriano credits the investment club with helping her land a sales-and-trading role at RBC Capital Markets after graduation.
"The club basically paved the way for me to become who I am today," Vittoriano said.
Though some students have been picking stocks since elementary school, most come in with little prior investing knowledge. The clubs usually have training programs led by upperclassmen.
Some clubs have seen an uptick in interest from students who recently started trading on personal brokerage accounts, spurred on by the madness around companies like GameStop in 2021.
At the University of Notre Dame, graduating senior Stewart Buzdon was president of the investment club this past year and was also a tour guide. Recently, he noticed, prospective students perked up when he mentioned the club during tours. High-school students have even emailed the club to express their interest in joining -- citing personal trading experience.
The day-trading students, though, are introduced to a different style. Browsing Reddit forums is out. Scouring financial statements is in.
For Charles Moskal, shifting his fellow students' mindsets from get-rich-quick bets to long-term value is a personal mission. He served as vice president of the investment club at Indiana State University for the past two years, and many club members come from families where money is tight. About half the school's students are eligible for Pell Grants.
"Risk is one of the things that college students have a tough time gripping, particularly people who need money now," Moskal said. "A lot of people don't understand where true value comes from in the market."
Investment clubs have another common goal: having fun. For the Blue Chips at the University of Chicago, dinners and other social events are part of the calendar just as much as meetings.
"We're all really good friends at the end of the day," Eckert said.
Comments