Five Questions With: Dennis McLeavey

DENNIS MCLEAVEY is professor emeritus of finance at the College of Business Administration at the University of Rhode Island. / COURTESY UNIVERSITY OF RHODE ISLAND
DENNIS MCLEAVEY is professor emeritus of finance at the College of Business Administration at the University of Rhode Island. / COURTESY UNIVERSITY OF RHODE ISLAND

Dennis McLeavey is professor emeritus of finance at the College of Business Administration at the University of Rhode Island. McLeavey teaches an investment portfolio management class that uses actual money through the Ram Fund, which has tripled in size since its inception 15 years ago. He talks about the teaching approach, why it’s worked and what students get out of managing a real portfolio.
PBN: Can you tell our readers a little bit about The Ram Fund, its history and why it started?
MCLEAVEY:
In the year 2000, as a professor of finance and decision science at the University of Rhode Island, I pitched the student-managed fund concept to the URI Alumni Association. They agreed to fund the students with a $100,000 account. The student class then became a money manager for an account with the Alumni Association. Keith Moore, a doctoral student with hedge fund experience at Neuberger Berman, launched the fund after I left URI to join CFA Institute in Charlottesville, Va. The motivation for pitching the concept was that students needed to learn the importance of long-term investing with accountability and fiduciary responsibility. I am not sure that I had any idea at the time of the very positive, knock-on consequences that would flow from their money management experience with the Ram Fund. The practical experience led to increased employment opportunities, interaction with alumni, engagement with certification programs and extensive networking, particularly with Ram Fund alumni. Fidelity Investments began hosting us for Ram Fund presentations at the end of each semester, and a URI alumnus, Jordan Kanter, became a key coordinator for us. The history has been one of teamwork among several URI professors, staff and alumni to create opportunities for the students. The emphasis on leadership, teamwork and presentation skills were not part of the original vision, although the core objective of critical thinking was there from the start.
PBN: How many students over the years have helped manage it and how has it performed to-date?
MCLEAVEY:
Approximately 450 students over the years have helped manage the Ram Fund. Now at a little over $330,000, the fund demonstrates that students are excellent money managers. Students learn that they must know something that the market does not know if they want to outperform their benchmark.
PBN: To what factors do you attribute its success so far? Has it always performed well?
MCLEAVEY:
I attribute the Ram Fund’s success so far to sector and security selection, but also, more importantly, to the student enthusiasm about applying what they have learned in other courses, not only in finance but in many other courses such as supply chain management, accounting, statistics, business and general education. The attribution then is to the exceptional quality of the URI students and education in finance as well as across the board. The fund has generally performed well but not always. The financial crisis in 2007-2008 hurt, but even there the relative performance was good. Although the market performance always grabs attention, the real performance lies in the career, networking, teamwork, presentation, critical thinking and leadership metrics that have materialized for the students.
PBN: What type of majors typically participate in this class? Why?
MCLEAVEY:
Typically the majors have been finance. Accounting, computer science, and economics majors have also done well in the Ram Fund. Diversity is a major objective of the Ram Fund. Students take this class because they want to go to Wall Street or to become wealth managers. Several students begin the Chartered Financial Analysis Program or the Certified Financial Planner Program while taking this and other finance courses.
PBN: What do your students get out of managing real money and how is that more/less beneficial than running a hypothetical portfolio?
MCLEAVEY:
Students gain tremendous confidence out of managing real money because they see that they are able to deliver on their fiduciary responsibility to the Alumni Association. The students make all the investing decisions, and they are held accountable. They learn elements of the CFA Institute Code of Ethics and Standards of Practice to ground them in the behavior expected in real-world portfolio management. Running a hypothetical portfolio has no consequence except perhaps a grade and the temptation to gamble to win a semester challenge. By contrast, the Ram Fund goes on past the end of every semester. In the real world, there are long-term consequences, and students in the Ram Fund are in the real world of investment management.

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