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Business and Ethics / Campus Community
Written by Dean Forbes
February 3, 2021
Who have you sought investment advice from lately? A family member, a financial counselor, a co-worker? You could do well by asking a group of Seattle University students who manage the Redhawk Fund out of the Albers School of Business and Economics.
Founded in 2009, the fund began with $250,000 of the university’s endowment. At the close of the markets on Dec. 31, 2020, the fund had a value of more than $1 million. Its 2020 return on investment was 23.67 percent, which outperformed its benchmark index, the S&P Fossil Fuel-Free, by 3.9 percent, and the S&P 500 by 5 percent. The investment approach focuses on long-term sustainable growth and ethical investing in fossil fuel-free U.S. large cap equities.
“The keys to our success are a diversified portfolio and a team of diverse perspectives in which each analyst focuses on one sector per quarter, lending their expertise and knowledge in that sector,” says Ravija Amlani, ’21, Redhawk Fund student chair.
The 25 graduate and undergraduate student members of the fund also have a faculty advisor, several Redhawk Fund alumni and access to expert advice from members of the Albers Finance Advisory Board, which is comprised of highly accomplished industry professionals from Boeing, Home Street Bank, Nordstrom, Russell Investments and others.
They will share their success in a Zoom call on Feb. 5, “Our Journey to $1M.” The event, 4:30–6 p.m., is open to the public. (The Zoom meeting ID is 92703063748.)
“The Redhawk Fund is one of our best examples of experiential learning in the Albers School,” says Dean Joe Phillips. “Not only do students learn about finance, but there is also the learning about leadership, teamwork, commitment and all the ‘soft skills’ students will need for professional success. And the students are blessed to have such an outstanding faculty advisor in Dr. Cathy Cao."
Says Dr. Cao, “Our Redhawk Fund members are full of passion and curiosity in learning. I am lucky to be part of the fund and observe not only the fund’s growth but the students’ growth. Our fund members transform from novices to professional investors, terrific team players and excellent leaders. The training helps students gain advantages in the job market.”
Seattle University is among a small number of institutions that provides its students the opportunity to actively manage a portion of the university’s endowment, according to Richard Wood, managing partner at First Hill Advisors in Seattle and chair of the Albers Department of Finance advisory board.
“The success of the fund is a testament to the student managers learning from that feedback as well as building upon the foundation laid by their predecessors,” says Wood, who is also a 1999 Seattle University alumnus and a member of the Board of Regents.
“I have had the pleasure of witnessing the growth and evolution of the Redhawk Fund since its inception. I think I speak on behalf of all of the Advisory Board members in saying that one of the most fulfilling components of ours is participating in the semiannual review of the fund’s performance. We don’t pull punches—we try to provide honest and constructive feedback to the students.”
Amlani reflects on the past year of investing, which she described as a “rollercoaster.”
“The beginning of 2020 saw the markets at all-time highs, right up until the effects of the global coronavirus pandemic hit in March,” she says. “I was a portfolio manager at the time and I remember many impromptu meetings with the management team, as well as with our faculty advisor, Cathy Cao, and the Chair of the Finance Department, Jot Yau.
“We decided to put a temporary hiatus on trading and instead focused on re-evaluating our asset-allocation and overall investment strategies in light of the new economic conditions. I took over as chair in June shortly after we re-initiated trading and it has been a real education in top-down analysis and going back to fundamentals as we carefully scrutinize each decision—almost every single industry and company has been affected by the pandemic.
Two Redhawk Fund alumni, Stanley Madjukie, ’20, and Sherry Zhuge, ’20, recently shared their experiences with Albers students via a Q&A. Following are excerpts from questions about how they reached the $1 million milestone, the impact of the pandemic on investing and the challenges of managing the fund as students.
Q: What were your strategies in getting to $1 million?
Madjukie: Since its founding, the Redhawk Fund has continuously utilized fundamental analysis in our research, which is knowledge that students pick up from their daily Albers courses such as Investment and Portfolio Theory, Intermediate Corporate Finance and Risk Assessment & Analysis.
Students apply that to conduct analyses of companies with the eventual goal of helping the fund decide on whether to invest. Since 2020, we’ve begun recruiting students with wider skill sets to prepare for a future where technology and data become critical for a deeper analysis of our portfolio and investments.
Zhuge: Plan and make decisions as a team. We usually start planning during quarter breaks. Portfolio managers will work on asset allocation to set buying goals for each sector. The allocation is based on both qualitative and quantitative analysis, making it both objective and flexible. All our stock long and short decisions revolve around the allocation we set.
We also believe in the collective wisdom of the team. Our decisions are mostly based on a team vote. And before we make the final purchasing or selling order, we carry out several rounds of reviews, including presentations, manager-analyst meetings, and analyst-advisor meetings.
Q: Did the pandemic change your strategy and if so how?
Zhuge: The strategy we adopted can be described with one word: reflection. The pandemic changed the way we manage the team but not our investment principles. We tried to stay calm and go back to the fundamentals—sector analysis.
When the stock market crash happened back in March last year, we were all under pressure from multiple fronts. We stopped in-person weekly meetings due to the stay-at-home order. Our new asset allocation plan designed in Winter 2019 was rendered useless as the pandemic changed a lot of our assumptions. And our fund balance fell dramatically from a high in February 2020. It was urgent for the management team to come up with a new plan to guide the team and figure out the new market condition.
The management team decided to put the stock recommendation and buying procedures on hold and go back to sector analysis, which used to be the task of portfolio managers. We wanted to have each of our analysts focus on the whole industry and economy instead of a specific stock. It was important for us all to understand how each sector/industry responds to the changing dynamics of the market before we start thinking about which stock could stay strong and resilient during and after the chaos.
Q: What were the challenges of managing the Redhawk Fund as students?
Zhuge: Unlike other student clubs and associations, we are trusted with real money. However, we do not get the kind of training or guidance people would usually expect from a position of such large responsibility, not to mention the steep learning curve. Luckily, our advisor is very committed to advising and helping us and has spent a lot of time answering questions from both managers and analysts.
The management team has also been working on data migration and documentation since last January. We started to collect training material for further reference. We also migrated our fund data to Bloomberg for better resource sharing. At the end of the day, we became more of a self-organized and self-learning club that aims to not only manage a fund but also to spread knowledge and help each other grow.
As students, we have a heavy workload from our classes. Some members also work part-time or even full-time. Therefore, we try very hard to multi-task. Occasionally there could be other priorities and we all learn to deal with the trade-off.
To learn more about the Redhawk Fund, visit www.seattleu.edu/business/centers-and-programs/redhawk-fund/ or email firstname.lastname@example.org.
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