Europe’s first and largest student-managed fund, with assets under management of some €700,000, is run and managed exclusively by students at Dublin’s Trinity College.
The Trinity Student Management Fund (SMF) was started with seed capital of about €30,000 back in 2010; it has since grown to some €700,000.
Now, as similar funds start to take off in other third-level institutions around the country, we take a look at how the original fund operates. And how it manages to beat the benchmarks.
While many of us spent as much time hanging out in the student bar as we did in lecture halls or the library during our years at third level, members of the Trinity SMF take a somewhat different approach to their time at the renowned university.
“I spend more time on the fund than [on] my actual college course,” laughs Ashling Bourke, the fund’s current chief executive, but she adds: “It’s the place I’ve learned most. It has given me so much.”
Bourke, a final-year global business student, has been involved with the SMF, since her first year at Trinity.
Now one of Trinity’s largest students societies, the fund has some 2,000 members in total, who attend events, but a core team who actively manage the fund through its executive committee.
The chief decision maker is chief investment officer Senan Delargy, who oversees the work of 14 sector managers. These, in turn, run their own team of analysts for each sector.
Delargy is also studying global business and is in his third year but the fund is not just open to finance students. About 50 per cent of its membership comes from Stem subjects, with 25 per cent from the arts and the remaining 25 per cent from business-focused courses.
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Students don’t invest. As Bourke says, “it would create a barrier to entry I’d be against” if they had to come up with their own funds to join.
Rather, sponsors (who include Davy, PwC and Arthur Cox) contribute an annual cash infusion each year, and gains are typically reinvested. The only withdrawals the fund makes is an annual sum to cover operational expenses, plus a donation to charity. About €12,000 was donated last year to the Trinity Access programme and the Trinity Centre for People with Intellectual Disabilities.
Bourke got the investing bug in her final year of high school in New Jersey (she came to Trinity on the advice of her Limerick-born parents), while Delargy recalls asking his parents why companies on the stock price pages of The Irish Times went up and down.
They didn’t know but when he came to Trinity, he found people who had the answer – or some of it – through the fund.
Anyone can join. The only criteria is that they explain their availability and motivation for joining. This year the fund couldn’t accept all applicants: it simply did not have enough space for meetings.
“You need to share the same values as the fund and be passionate about helping people to learn, being willing to give up an hour or two of your day to help someone out,” says Delargy.
It’s an exciting opportunity. As he adds: “It’s the most money most students will ever manage.”
But the downside is that you can “lose your weekend” to the demands of the fund. The fund’s accounts close at 2am each morning and he admits to staying up often to check on how the fund’s positions have moved.
Investments
But how is the fund invested? It currently has 28 holdings across European and US markets, with a bias towards the US, says Delargy. Its biggest holding currently is Apple.
It will typically invest about €15,000-€20,000 when taking an open position in a stock.
And how do they make decisions?
“We aim to get as many ideas as possible,” he says, adding that members of the investment committee are expected to pitch a stock idea at least once a year.
The fund doesn’t invest in crypto but does have an alternatives team, which looks at opportunities in credit, property etc, as well as a quants division.
Pitching is an important part of the fund. “When you get an idea into the portfolio, it gives you an attachment to the fund,” says Bourke.
Both have had experience pitching stocks – with varying success. Two years ago, Bourke pitched Dollar General, a US chain of discount stores, which she thought was undervalued. However, not long after, the company became the subject of an investigation by the US attorney general.
The stock price tanked, and the fund exited quickly but Bourke says the pitch taught her the most about how to approach valuing a stock.
One of Delargy’s ideas never made the fund; it couldn’t buy into Polish supermarket Dino Polska, which he had picked for growth, through its platform, as, at that time, it didn’t have the ability to buy Polish equities.
And what if a student was to go rogue à la Nick Leeson or John Rusnak?
“There are a lot of safeguards,” says Bourke, noting that no two people manage the same accounts.
There is no one telling the team how to invest, but there is some form of oversight in that the investment team will meet the advisory board to discuss decisions.
“We are accountable to them and present our portfolio every few months,” says Bourke.
This board of experienced professionals includes Alan Dargan, founder and partner of Lonsdale Capital Partners, a London private equity firm; Anthony MacGuinness, chief investment officer at Irish Life Investment Managers; and Joseph McCarthy, founder and chief investment officer of Islandbridge Capital – all past students at TCD.
“They’re very generous with their time,” says Delargy, adding that they tend not to say outright what their view on the market is but are more interested in whether or not the students are making informed decisions, “instead of a reaction to the market”.
The fund takes a long-term view on investing and wasn’t tempted by so-called Trump trades in recent weeks.
They are very well informed. Fund members try to do their own fundamental analysis and publish regularly. They also have a podcast, which has managed to attract an impressive roster of guests, including GlenDimplex founder Martin Naughton; Howard Marks, co-founder of Oaktree Capital Management; chairman of UBS Colm Kelleher; and former Barclays chief executive Bob Diamond.
Students also cover AGMs where possible, attending those of Flutter, Kingspan and AIB in recent years.
“We stood up and asked why they had done certain business practices. We’re passionate about using our voice where we can,” says Bourke.
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A highlight of the students’ time in the fund is an annual trip to London, where they visit trading floors at the likes of Morgan Stanley, Barclays and Citi, as well as private equity funds and family offices.
Past students of the university are a useful entrée into these rarefied rooms, and it offers a “really great opportunity” for networking – both with the professionals and other student fund members.
While not run as an ESG (environmental, social and governance) fund, the team does see ESG as a core value. “We keep track of our ESG score, and we’ve actively lowered it this year,” says Bourke.
When TCD students held a protest last year against the Israeli invasion in Gaza for example, the university said it would fully divest from three Israeli companies, in which it held investments as part of its endowment funds.
But there was no pressure for the Trinity SMF to do likewise, as it had no Israeli holdings.
Some 15 years since it was first formed, the Trinity SMF is no longer the only such fund in Ireland. UCD has a long-only equity fund, with about €30,000 in assets under management.
That fund has more than 300 student members and is sponsored by Davy and Fidelity International, while Queen’s Student Managed Fund offers students of the Belfast university the opportunity to manage and operate a real-money investment portfolio. They manage funds of about £70,000.
The Trinity students now offer mentoring to students in colleges such as Maynooth, Galway and Limerick, who are also looking at setting up a fund.
Performance
The fund’s benchmark is the MSCI World index. Last year they beat it, as the fund enjoyed its strongest return to date (the MSCI returned 26.2 per cent v 29.3 per cent for the Trinity SMF). But it’s not all about chasing alpha.
“The fact that we’ve increased our portfolio hasn’t been the main goal for the fund,” says Bourke. “The main goal is preparing for a career in finance. It’s a great way to set you up.”
After several finance-related internships, Bourke will be at PJT Partners in London this summer, where she will be working alongside another former fund member.
Delargy agrees that the fund can be a great stepping stone to a job, and to a great time in college.
“It’s one of the best things we’ve gotten involved in. We always tell people, it’s a great way for like-minded people to meet,” he says.
