It will no longer be "Monopoly money" for some University of Pittsburgh students. Members of the Socially Responsible Investment Club (SRIC) shift this semester from theory to the opportunity to invest $100,000 in companies that are acting as responsible corporate citizens.
Katz Graduate School of Business Dean John Delaney said the school will provide the funding to the club. "We believe experience-based learning is a critical aspect of preparing business students for outstanding careers," said Delaney. "While learning about investing in theory is useful, using real dollars to understand how actions affect outcomes is a lifelong lesson."
The club was launched in 2007 by advisor and Assistant Professor of Finance Jay Sukits and includes undergraduates students ranging from sophomores to seniors. "I worked on Wall Street for over 20 years," said Sukits. "There was always a belief on Wall Street that if you had socially responsible criteria, you couldn't do very well because you'd have to eliminate a lot of companies. I wanted to show you could actually manage a portfolio using socially responsible criteria and still do well."
Students created an investment policy statement defining the parameters of what they considered to be a socially responsible company. "For example they won't invest in any companies that sell or produce tobacco products," Sukits said. "They won't invest in any companies that do business in countries like Darfour, and yet there are things that some people observing the portfolio might say 'well those are questionable.' "
Students evaluate comapnies from the Standard & Poor's 500, an index of the top 500 publicly traded U.S. companies. The students then chose three stocks fro each of the S & P's 10 major business sectors. "We've managed that portfolio now essentially for about two-and-a-half years and we've been able to beat the performance of the S & P 500 including dividend," Sukits said.
Now they'll have real money to invest in those stocks.