New group banking on Wall St. success

Imagine sitting in a classroom, frantically studying theoretical investment situations in order to successfully enter the job market. Now imagine using $5 million of the University's endowment to invest in the stock market to prepare, through real money management, for future employment. The first scene depicts a typical Wharton undergraduate or graduate classroom. The second portrays a new program which Wharton students have developed to expose them to the real world of Wall Street. The program, called the Wharton Fellows Fund, was developed by Wharton graduate students Phillip Coburn and Robert Craig. It will give 12 undergraduate and graduate students the chance to invest in the stock market and create a mutual fund, Coburn said. Those students will be fully responsible for the management of the money, but a "junior analyst program" will allow other interested students to become involved in the decision making process. Wharton faculty members and leaders of various investment firms will advise and generally oversee the entire program, Coburn said. The program, which Coburn and Craig began developing last year and plan to begin in upcoming months, is not a new idea. Coburn said at least 30 other schools have real money management programs. "We were a major step behind because we didn't have anything set up," Coburn said, adding that "there was a lot of enthusiasm for [the fund]." The fund will connect with the Penn Investment Alliance and one fellow will be a PIA member. "[The fund] is a unique opportunity for people to get hands on experience in the stock market," said Mandee Heller, College and Wharton senior and president of the PIA. Coburn explained that the fund has not yet established funding. Students and faculty are working on two options to achieve their $5 million goal – using the University endowment, which Coburn estimated at $1.2 billion, or raising the money themselves. "Five million of that is not a huge chunk of money," Coburn explained. "We'd be managing part of the endowment's money. It's not really spending money." This option would require approval from the University Trustees. The students and faculty have not yet approached the Trustees with the idea. Coburn said using the endowment is preferable for tax purposes. Assistant Finance Professor Bruce Grundy provided another reason for using money from the endowment. "If you're responsible for a real loss ? of the University's endowment, you'll take that with you to your grave," he said. The fundraising option could involve alumni and firms that recruit on campus. Coburn said participants will be chosen by faculty in November. He hopes to officially begin the program on February 1, even if it does not begin with $5 million. "I don't think having a huge amount of money is critical," said Accounting Professor Richard Sloane, who is on the selection committee. "[The fellows] have to develop a track record first." "This is going to be an important addition to the learning experience," Finance Professor Donald Keim said. "It will be a very nice complement to the structural, theoretical courses." Wharton freshmen, sophomores and juniors, along with first year graduate students are welcome to apply for fellowship in the program. The deadline for applications is November 15.