Undergraduate students manage $500k portfolio in TVA’s Investment Challenge Program
Many college students learn the basic concepts of investing in business or economics courses. However, at Vanderbilt, students get hands-on experience managing real stocks with real money.
As part of the Investment Analysis and Corporate Valuation courses, taught by Associate Professor of the Practice of Managerial Studies Willis Hulings, more than 30 students across the two classes are competing in the Tennessee Valley Authority’s TVA Investment Challenge Program, where they manage a $500,000 fund.
The competition requires university teams to manage a fund by investing broadly in sectors and stocks, with the goal of beating the S&P 500 total return index. Vanderbilt was one of six private universities to join the competition in 2003, with Hulings’ classes beating the S&P 500 in five out of the last six years.
“We teach theory and practice in class, but there is no substitute for applying that to a real-world situation,” Hulings said. “Very few students have enough money to invest in the stock market, and this experience puts them in the seat of an active investor. I am proud of what our students have accomplished for Vanderbilt in this competition.”
Hulings’ classes are split into five investing teams all working on Vanderbilt’s portfolio, with guidance from students who took the courses in previous semesters. The teams are responsible for managing the day-to-day decisions and investments. They design short- to mid-term investment strategies, decide on stock positions, and monitor performance reports within the guidelines of the competition.
The TVA Investment Challenge Program was created in 1998 with an initial allocation of $1.9 million from a TVA trust to offer students the opportunity to manage actual investment portfolios. After demonstrated student success, TVA expanded the competition in 2003, going from 19 universities to 25 and increasing the total allocation to $10 million. Today, the TVA Investment Challenge consists of 27 participating universities managing $13.5 million, with teams earning performance rewards at the end based on their returns versus the benchmark. Over the last six years, Vanderbilt’s performance award has totaled $17,881. Since Vanderbilt entered the competition in 2003, the performance award has totaled $37,229.
“It’s inspiring to see Vanderbilt students navigate a dynamic market to repeatedly achieve strong results,” said TVA’s Manager of Corporate Investments Ben Duby. “More importantly, the ICP teaches more than investing. It provides students the opportunity to put their knowledge and skills to work to prepare them for their professional careers.”
Thomas Richardson, a senior double majoring in economics and political science, said he took Hulings’ class to help him build not only his personal financial portfolio, but also to give him the necessary skills for a future career in investment banking.
“TVA taught me how to apply the valuation techniques that I learned in the class to a group setting, such as what metrics make a business attractive to invest in,” Richardson said. “I found that selecting a company to pitch was challenging yet rewarding, and I enjoyed learning about different business models and growth philosophies. I also enjoyed pitching stocks to the class and demonstrating conviction in my investment idea.”
Caleb Fockens, a senior majoring in economics, participated in the competition in 2022 but still returns to give advice to current teams. While he initially took the class to learn more about investing, he said he also learned about teamwork and leadership.
“Being part of the competition for the last three semesters both on a team and as an adviser has been an absolute pleasure, and I am always excited to return to it,” Fockens said. “I think it does an excellent job of turning the theoretical concepts students learn in class into very real applications with very real consequences. I don’t think there are many opportunities at Vanderbilt that are so involved in genuine outcomes that reach beyond the campus.”
Hulings’ fall 2024 classes learned in early January that the Vanderbilt portfolio returned 31.2 percent, beating the S&P 500 by 6.1 percent. In the spring, students will attend a two-day conference with other schools in the competition to review portfolios, listen to guest speakers, and receive career advice, as well as attend a dinner and awards ceremony to honor their efforts. In the fall, a new group of students will try their hand at beating the index and continuing Vanderbilt’s ongoing success in the competition.