The Lemma Senbet Fund is the largest student managed investments fund by endowment in the U.S. It's offered as a limited-enrollment year-round

experiential learning Experiential learning (ExL) is the process of learning through experience, and is more narrowly defined as "learning through reflection on doing". Hands-on learning can be a form of experiential learning, but does not necessarily involve students ...

course to top tier undergraduate students from the Robert H. Smith School of Business at the

University of Maryland The University of Maryland, College Park (University of Maryland, UMD, or simply Maryland) is a public land-grant research university in College Park, Maryland. Founded in 1856, UMD is the flagship institution of the University System of M ...

(UMD).. Each student in the fund gets to manage around $1.8 million as of 2022.

Founding

The fund, named for Lemma Wolde Senbet, the William E. Mayer Chair Professor of Finance at the Smith School of the University of Maryland, was founded in 2006 with initial capital of US$50,000 from the school's endowment fund.

Governance structure

The investment management team consists of 12 undergraduate students chosen through an interview and presentation process designed to simulate the hiring process of

investment banking Investment banking pertains to certain activities of a financial services company or a corporate division that consist in advisory-based financial transactions on behalf of individuals, corporations, and governments. Traditionally associated wit ...

firms. The team consists of 2

portfolio managers A portfolio manager (PM) is a professional responsible for making investment decisions and carrying out investment activities on behalf of vested individuals or institutions. Clients invest their money into the PM's investment policy for future gro ...

and 10

equity analyst A financial analyst is a professional, undertaking financial analysis for external or internal clients as a core feature of the job. The role may specifically be titled securities analyst, research analyst, equity analyst, investment analyst, o ...

s each dedicated to a specific industry sector:

consumer products A final good or consumer good is a final product ready for sale that is used by the consumer to satisfy current wants or needs, unlike a intermediate good, which is used to produce other goods. A microwave oven or a bicycle is a final good, but t ...

(discretionary), consumer products (staples),

energy In physics, energy (from Ancient Greek: ἐνέργεια, ''enérgeia'', “activity”) is the quantitative property that is transferred to a body or to a physical system, recognizable in the performance of work and in the form of heat a ...

financial services Financial services are the Service (economics), economic services provided by the finance industry, which encompasses a broad range of businesses that manage money, including credit unions, banks, credit-card companies, insurance companies, acco ...

healthcare Health care or healthcare is the improvement of health via the prevention, diagnosis, treatment, amelioration or cure of disease, illness, injury, and other physical and mental impairments in people. Health care is delivered by health profe ...

industrials Manufacturing is the creation or production of goods with the help of equipment, labor, machines, tools, and chemical or biological processing or formulation. It is the essence of secondary sector of the economy. The term may refer to a rang ...

information technology Information technology (IT) is the use of computers to create, process, store, retrieve, and exchange all kinds of data . and information. IT forms part of information and communications technology (ICT). An information technology system (I ...

, materials,

telecommunications Telecommunication is the transmission of information by various types of technologies over wire, radio, optical, or other electromagnetic systems. It has its origin in the desire of humans for communication over a distance greater than that fe ...

, and

utilities A public utility company (usually just utility) is an organization that maintains the infrastructure for a public service (often also providing a service using that infrastructure). Public utilities are subject to forms of public control and ...

. Each sector analyst pitches approximately 4 stocks per year, and must persuade all 12 members (not just a majority) of the investment team to buy. The student investment management team uses Bloomberg Professional Services running on

Bloomberg Terminal The Bloomberg Terminal is a computer software system provided by the financial data vendor Bloomberg L.P. that enables professionals in the financial service sector and other industries to access Bloomberg Professional Services through which u ...

s to conduct in-depth

financial analysis Financial analysis (also known as financial statement analysis, accounting analysis, or analysis of finance) refers to an assessment of the viability, stability, and profitability of a business, sub-business or project. It is performed by profes ...

, manage the asset portfolio, and execute security trades. The students are unpaid, and do not share in the fund gains nor receive distributions.

Investment strategy

The long-term performance goal of the Lemma Senbet Fund is to outpace appreciation of the

S&P 500 Index The Standard and Poor's 500, or simply the S&P 500, is a stock market index tracking the stock performance of 500 large companies listed on stock exchanges in the United States. It is one of the most commonly followed equity indices. As of D ...

on a risk-adjusted basis. Historically, the fund has adopted a

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investment approach that is driven by

Economic indicator An economic indicator is a statistic about an economic activity. Economic indicators allow analysis of economic performance and predictions of future performance. One application of economic indicators is the study of business cycles. Economic ...

s, then

Industry Industry may refer to: Economics * Industry (economics), a generally categorized branch of economic activity * Industry (manufacturing), a specific branch of economic activity, typically in factories with machinery * The wider industrial sector ...

trends, and finally individual Company performance (EIC). Most asset instruments are long equity positions. Specific stock selections are based on a combination of

fundamental analysis Fundamental analysis, in accounting and finance, is the analysis of a business's financial statements (usually to analyze the business's assets, liabilities, and earnings); health; and competitors and markets. It also considers the overall sta ...

and

technical analysis In finance, technical analysis is an analysis methodology for analysing and forecasting the direction of prices through the study of past market data, primarily price and volume. Behavioral economics and quantitative analysis use many of the sam ...

valuation techniques under the Growth at a Reasonable Price (GARP) model.

Fund growth

Since founding in 2006, even after annual distributions the Lemma Senbet Fund has grown 18-fold from $50,000 to $1.8 Million (fiscal year ended Dec 31, 2022).

Fund Distributions

The Lemma Senbet fund pays a 5% distribution to the UMD Deans Office each year. In 2017, this distribution amounted to $37,729.

References

{{Reflist, colwidth=30em, refs= {{cite web , url=https://www.rhsmith.umd.edu/files/Documents/Programs/Undergraduate/SenbetFund/2017/2017-senbet-fund-eoy-report.pdf , location = College Park, Maryland, USA , title=Annual Report of Lemma Senbet Fund , publisher=University of Maryland , date = May 2, 2017 , accessdate = March 26, 2018 {{Open access {{cite web , url=https://www.rhsmith.umd.edu/news/smith-school-launches-50k-undergraduate-investment-fund , location = College Park, Maryland, USA , title=Smith School Launches $50K Undergraduate Investment Fund , publisher=University of Maryland , date = November 7, 2006 , accessdate = March 26, 2018 {{Open access {{cite web , url=https://www.thestreet.com/story/10390357/1/u-of-marylands-undergrad-fund-earns-street-cred.html , location = Wall Street, New York City USA , title=U of Maryland's Undergrad Fund Earns 'Street Cred' , publisher=TheStreet , date = November 15, 2007 , accessdate = March 26, 2018 {{Open access {{cite news , url=https://www.washingtonpost.com/wp-dyn/content/article/2008/05/10/AR2008051000197.html , location = 1301 K Street NW, Washington, D.C., USA , publisher=Nash Holdings LLC , title=Market Master's , newspaper=The Washington Post , date = May 11, 2008 , accessdate = March 26, 2018 {{Open access {{cite web , url=http://www.dbknews.com/archives/article_00d34a71-7e0c-500e-805b-7a09aa07ab55.html , location = College Park, Maryland, USA , title=University Fund Preps Students , publisher=The Diamondback , date = December 3, 2006 , accessdate = March 26, 2018 {{Open access {{cite web , url=https://www.rhsmith.umd.edu/news/wall-street-tools-give-edge-smith-students , location = College Park, Maryland, USA , title=Wall Street Tools Give Edge To Smith Students , publisher=Robert H. Smith , date = July 10, 2014 , accessdate = March 26, 2018 {{Open access Investment funds Experiential learning