By Anne Halliwell

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Two student management investment funds have been put in charge of managing $2.2 million between them in UK endowment funds in 2014-15.

Three more investment funds, each managing another $1.1 million, are scheduled to be funded in August of 2015, according to the UK investment committee.

An undergraduate program has been running for 15 years, initially funded with $100,000 in Tennessee Valley Authority funds, said finance professor Brad Jordan.

UK committed more than $600,000 toward the undergraduate program and funded the first graduate program entirely for the 2014-2015 school year, according to the UK investment committee.

The students in the course choose stocks to invest in and report back to the class and the investment committee, Jordan said. The trades are then made through the university office of the treasurer.

“It’s essentially an honors class,” Jordan said of the invitation-only class. “We have to be pretty selective — this is real money, and we don’t get it back if we lose it.”

Christian Oberst, an accounting and finance junior in the program this year, said getting to work in a small course with the Gatton faculty would be helpful, as would gaining experience in evaluating and pitching stocks.

“It’s a real-world experience because you’re going to be investing actual money and … that sets you apart, but it’s also built around teaching you,” Oberherst said.

While the students are able to act independently, the UK Investment Committee monitors their performance, Jordan said, and he reserves veto power on investments.

“We could lose money, there’s no doubt about it,” Jordan said. The programs have to invest all of the allotted money, so if the market drops, so does the money in stocks.

The students have actually outperformed the university in recent years, Jordan said, due to an investment style that is better-suited to the current market.

The students look for companies with a competitive advantage, Oberst said, which means that the risk of dropping dramatically is blunted.

“It is kind of nerve-wracking, but we look at a big margin of safety,” he said.

Given the success of the undergraduate program and the construction of a Financial Literacy Center in the Gatton building, the business college proposed expanding the program to include three MBA tracks and a master’s of science and finance in 2015, Jordan said.

Paul Gerwe, a research analyst for Robert W. Baird & Co., was involved in the undergraduate program as a junior in spring of 2012.

Gerwe said the class taught him how to consider investments from a buyer’s point of view and gave him a “pretty professional look” at the career. He also appreciated being able to bounce ideas off of his classmates and Jordan, he said.

“It’s a student example,” Gerwe said. “It was set up so kids could learn about investments and real-life decisions.”