University of Pittsburgh
August 29, 2012

Socially Responsible Investment Club at University of Pittsburgh to begin managing $100,000 portfolio

Katz provides funding as part of school’s experience-based learning approach
Contact:  412-624-4147

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PITTSBURGH—University of Pittsburgh students in the Socially Responsible Investment Club (SRIC) will move away from theory this fall, as club members will have the opportunity to invest $100,000 in companies that are acting as responsible corporate citizens.

Joseph M. Katz Graduate School of Business Dean John Delaney said the school would give the SRIC funding to help provide an experience-based learning opportunity for students.The Socially Responsible Investment Club uses the Financial Analysis Laboratory in the Joseph M. Katz Graduate School of Business and College of Business Administration to track the stocks in their portfolio.

“We believe experience-based learning is a critical aspect of preparing business students for outstanding careers. While learning about investing in theory is useful, using real dollars to understand how actions affect outcomes is a lifelong lesson,” Delaney said. “By promoting social responsibility while teaching important investment skills, the school is advancing the future of Pitt students and the economy for the long run.”

The club, launched in 2007 by Advisor and Clinical Assistant Professor of Business Administration Jay W. Sukits, comprises undergraduate students ranging from sophomores to seniors, with many participating in the Certificate Program in Leadership and Ethics from the David A. Berg Center for Ethics and Leadership in the Katz Business School. 

Audrey Murrell, director of the Berg Center, said students pursuing the Certificate Program in Leadership and Ethics join the club to put the skills they learn into practice.

“The SRIC helps reinforce what our students are learning in the classroom,” Murrell said. “This experience is a great example of where ethics and leadership meet.

Sukits said the club is a tremendous opportunity for students to manage real money in a portfolio.

 “Our club is set up as an education experience, one that future employers also find very attractive. It really sets our students apart from others when they have it on their resume,” said Sukits.

Students, acting as investors, evaluate companies from the Standard & Poor’s 500 (S&P 500), an index of the top 500 publicly traded American companies. From this index, students chose three stocks from each of the S&P’s 10 major business sectors.

Sukits said the students created an investment policy statement, defining the parameters of what they considered to be a socially responsible company. For months, the students debated the merits of companies, critically examining a company’s involvement in the community, corporate governance and ethical practices, as well as their records on human rights and the environment. The students then screened the socially responsible companies with traditional financial analysis applications in order to choose the final 30 portfolio selections.

“Their approach is to use an enhanced indexation style of portfolio management to manage risk through diversification while delivering a strong value proposition,” Sukits said. 

He said the enhanced index style of investing is long-term and similar to the style used by Warren Buffett, primary shareholder, chairman, and CEO of Berkshire Hathaway.

“The commonly held belief on Wall Street was if you used socially responsible criteria to evaluate companies for your portfolio, you would hurt your return,” Sukits said. “But that has not been the case with the SRIC portfolio.”

Measured against the S&P 500 performance, the students’ portfolio in previous years has bested the index by 0.5 points to 1.5 points each quarter, Sukits said.

The club’s members, who meet every Friday during the academic year, monitor their portfolio’s performances, and discuss financial stewardship. Five teams of students break down the portfolio and follow approximately six stocks per team plus two of the S&P 500’s sectors. Each quarter they evaluate each stock’s performance and value in the portfolio. Since the club was formed, Sukits said, only a few of the stocks have been replaced. 

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8/29/12/mab/jer

The Socially Responsible Investment Club uses the Financial Analysis Laboratory in the Joseph M. Katz Graduate School of Business and College of Business Administration to track the stocks in their portfolio.

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