Fake money, real experience: Dal students profit from pretend hedge fund

Dalhousie University’s investment society does not “invest and giggle.”

The Dalhousie Investment Society (DALIS) has a hedge fund called the Maritime Fund. The thing that makes it different than almost all other university investment societies is that it doesn’t use real money.

Prof. Rick Nason, who oversees the society, says that is the fund’s most significant feature.

“Most business schools do have a student-run investment fund. But what they do is very limited. They do what I call invest and giggle. Because most schools are run with real money, they have very tight controls on what they can do,” Nason said.

Nason, a professor of commerce, believes that the practice of university investment clubs using real money may hinder the students’ possible learning experiences.

“If you want to work for a major investment firm, just knowing about stocks is absolutely not going to cut it. It’s like wanting to be a race-car driver and only knowing how to ride a tricycle,” Nason said.

The Maritime Fund employs trading strategies common in modern-day hedge funds, like shorting, which tries to profit on dropping stock values.

The fund has four separate portfolios: commodities, North American equities, international equities and fixed income. It has been going on for about 10 years and has helped move students into real-life careers in investing.

“At least 150 people from DALIS have gone on to the industry, and that’s probably a very, very, very conservative number,” Nason said.

Not all members are commerce students. They welcome students from all programs.

“We had one student who was a chemistry student, who is now a portfolio manager to the Canada Pension Plan,” Nason said.

The Maritime Fund is treated as an actual company with a real-life corporate hierarchy.

“They’re learning how to more or less manage a company and get promoted up through the ranks. And that’s a very … crucial part of it,” Nason said.

The Maritime Fund has impressed many people, one of them being David Darst, a former chief investment officer at Morgan Stanley.

“He was so impressed with what we were doing, he actually visited us twice,” Nason said.

Riskier investment strategies come with both higher potential gains and higher potential losses. One student lost 19 per cent in a single day on one trade while another gained 34 per cent in one month on one trade.

But for the students, it’s not just the real-life hedge fund experience that they value so highly.

“In my first and second year, I think the most memorable thing for me was just networking with the fourth-year students because they have all the information about where to find co-ops,” said Dalhousie commerce student Josh Franchuk, a manager of the commodities portfolio.

Spencer Osborne is an executive at the society. He’s a physics student planning a career in finance because of the program.

“The amount of skill that it’s brought, as well as the network of other members, has been incredibly helpful,” Osborne said.

Some members have even taken the skills they’ve learned and applied them to their personal investment portfolios.

“Following the price of oil, energy, all that stuff has proven useful just in personal investing,” said commerce student Aidan Wood, a commodities portfolio manager for the fund.

For almost all members, it begins with joining about 100 students at the society’s weekly meeting.

“I basically just said I’d check it out. And I never left. I had a great time,” Wood said.

The members appreciate the differences between society meetings and their regular classes.

“You’re not really in a school setting or a classroom setting. You can cuss,” said Franchuk.

One distinguishing feature of the society that its members all mention are the motivational ramblings of Nason, which usually begin each meeting.

“For about 15 or 20 minutes, he rants about a topic. Sometimes he gets personally into it and aggressively, emotionally into it. It’s awesome because he’ll be screaming and throwing his hands everywhere,” said Nick Francis, a manager of the international equities portfolio.