The SMF is structured like an institutional investor with a CIO and sub-teams compromising of Asset Allocation, Active Australian Equites, Risk and Compliance, and a Relationship Team. These teams are comprised of students and are overseen by a Fund Convenor and Course Convener on an ongoing basis. There are also a range of industry professionals who form the Fund’s Investment Advisory Committee (IAC). The IAC reviews investment recommendations made by the students, and their endorsement is required before a trade occurs.
The SMF was established with the generous seed donation from Russell Clark with further contributions made by the family of Andre Morony, Geoff Warren and Kerry-Ann Hugo. These contributions were kindly matched by the ANU Research School of Finance, Actuarial Studies and Statistics.
A key component of the SMF is the philanthropic nature of its operations which are to be pursued in perpetuity and are fundamentally intertwined with the Fund’s objectives. Each year the Fund makes a distribution that is used to fund a 4-year scholarship equivalent to $10,000 annually for a disadvantaged student, called the “Student Managed Fund Equity Scholarship “. The Fund’s current position allows us to provide funding for the scholarship, with a desire to pursue this objective in perpetuity whilst aiming to grow the real value of the fund to support and enhance these commitments. Further details can be found in the SMF Equity Scholarships tab.
The nature of the SMF means that it is focused on long-term returns, and whether they will be sufficient to maintain the value of its philanthropic activities over the long run. This means that short term market fluctuations are de-emphasized, and instead focus is placed upon underlying fundamental value of the assets held by the Fund. We do not shy away from a good long-term investment just because of the fear that there might be a short-term loss. Providing the long term goals of the Fund remain attainable, short term fluctuations are not a concern.
The SMF is structured to deliver learning value for students and increase engagement with external parties, as well as to funding the SMF Equity Scholarship. Thus the value of the SMF extends far beyond the value of its portfolio. Investment risk thus is also considered against the long-term developmental and philanthropic activities of the Fund. The students are encouraged to learn about risk and how to manage it, and this comes with some probability of loss, especially as future market movements cannot be known with certainty. If a sustained fall in the Fund value happens to occur, the ability of the Fund to support philanthropy may fall, but a lasting lesson may have been learned.
Students are graded on working towards the SMF’s five key values: they are expected to help build the legacy, make a contribution, be involved in teamwork, work toward the SMF objectives, and take a long-term view. Investment performance does not directly enter into the grading, especially as the SMF is a long-term Fund and students are involved for just one year.
A detailed description of student assessment requirements can be found in the relevant component of the course outlines. Broadly speaking, there are three assessment tasks. The first is a representative piece of work, chosen by the student, which is indicative of the contribution the student has made to the SMF. The second is a review from the Conveners, which is to be influenced by a “reflective summary” submitted by the student as an indication of how their work contributes to the five key values of the SMF. The last piece of assessment is a “peer review” in which fellow students assess the contribution made by a student to the SMF.
Teamwork is a key value of the SMF and it is paramount that a healthy environment in which students feel engaged, secure but also challenged is created. In this respect, the outcomes of the SMF regarding teamwork and peer review scores have been exclusively productive. As with all elements of the SMF, contestability is encouraged. However, there is no tolerance for disrespectful behaviour which involves an unwarranted and deliberately low peer review score. The overwhelming outcome from the SMF is one in which students have developed strong personal bonds, and thus an instance of an unjustifiably negative peer review score is extremely unlikely. Further, if the Convenors are satisfied that this has occurred, the score would not be considered for assessment.
Broadly speaking, the Australian Active Equities (AAE) team is involved in the analysis and subsequent recommendation of Australian equities as investments. The Asset Allocation (AA) team are involved in the analysis of asset classes and the subsequent recommendation of investment within asset classes using ETFs. The Risk and Compliance (R&C) Team is responsible for ensuring that the SMFs activities are in accordance with the Fund’s foundational documents, the Charter and Governance Structure and Investment Policy Statement. They also generate reports on the portfolio and performance, in conjunction with the Relationship Team. The Relationship Team is responsible for internal and external communication while also being tasked with a variety of duties which ensure the smooth running of the Fund.
Students receive practical experience in funds management, which is an unparalleled advantage in pursuing employment in the industry. The SMF delivers the experience that can help secure external internships and graduate positions prior to graduation, and thus offers a truly unique opportunity to enhance the cv. The use of overlapping cohorts of students also provides a structure in which students are provided guidance by senior students when they first join the SMF, and then can demonstrate leadership skills in aiding new members in their subsequent semester.
We have found that some of the deepest learning relates to softer skills, in addition to the more technical skills related to leaning about investments. Student feedback has consistently highlighted that the SMF has provided students with invaluable soft skills about team work, communication, time management, responsibility, self-motivation and leadership. Many of our SMF students have gone on to work in top financial and business institutions and credit the SMF for the highly transferrable soft skills that they gained.
The learning outcomes of students is a defined objective of the SMF. The relevant extract from the Charter and Governance Structure is produced below, and recognises the breath of learning students get from the SMF:
“Students should build: (i) capability to manage money in pursuit of objectives; (ii) understanding of fund management; (iii) capacity to communicate and advocate recommendations; (iv) ability to operate in a team environment.”
While SMF’s are established at a handful of other universities within Australia, the manner in which the ANU SMF is structured and its values make it truly unique. The ANU SMF is structured as an endowment fund that works towards long-term objectives, whereas alternative SMF’s are often structured as equity funds that aim to outperform an equity index. The ANU SMF also stands out relative to other SMF’s in the broad range of functions as represented by the various teams, including Asset Allocation, Risk and Compliance and Relationship teams, as well as the Active Australian Equity teams. Led by the CIO, the four teams work together to undertake the responsibility of managing the SMF like it was an institutional investor. It also allows the ANU SMF to pursue long term learning, developmental and philanthropic objectives which may be overlooked by other SMF’s.