Investing in a fairer future

A real-life stock fund gives students a head start for a business career (and it beats the market).

John Fan, second from left, with Griffith students Chrystal Coughlan, Nick Hawkes and Sama Haddad. Picture: Griffith University

Griffith University’s Student Investment Fund provides students with real-world investment skills and turns a profit while remaining socially responsible, says senior finance lecturer John Fan.

Seeded by Griffith Business School in 2018, the Griffith fund is now Australia’s largest sustainability-focused student fund, Fan says. “Every other student fund is a typical fund that tries to mimic what the industry does,” Fan says. “We want to be the most sustainable fund, which aligns with our values, so we put sustainability issues in front of profits.”

Even in the current net zero climate, an environmental focus can make it more difficult for investment funds to make money, but the Griffith fund does well financially despite the constraints. A number of other universities in Australia manage investment funds, Fan says, but they operate in completely different ways, so direct comparisons can be difficult.

The Griffith Student Investment Fund is “very well diversified”, Fan says. Since it was established, the fund has delivered a total return of 49.68 per cent, significantly outperforming the benchmark Dow Jones Sustainability Australia Index, which achieved 30.39 per cent over the same period.

The corporate world prefers potential employees to have some real-life hands-on financial experience, but it can be difficult for students from diverse backgrounds to find suitable internships. The Griffith Student Investment Fund exposes students to the world of real data analysis, detailed research of company ethics and the importance of rigorous investment proposals.

“The fund beats some of the broad market indicators,” Fan says, adding that the investment decisions are the product of careful and thorough research. Groups of students are assigned different stocks or groups of stocks to investigate.

Program founder Robert Bianchi.

The students look into the stock’s financial performance, and their social and environmental records, and they note any red flags.

Selected third-year finance students and postgraduate students use the university’s trading rooms to research the market to help determine how the fund manages its capital of $550,000. The groups of students then pitch their investment recommendations to an investment committee made up of business executives and academics. This committee makes the final investment decisions, based on the information gleaned from the student pitches. “We then overweight or underweight certain stocks, relative to our benchmark,” Fan says.

The net returns from the Griffith fund are then used to support an annual $5000 scholarship for undergraduate Griffith Business School students facing financial hardship.

The fund buys stocks that are in the Dow Jones Australia Sustainability Index, which Fan says is already a sustainable subset of stocks.

“The university puts another layer of screening on top of that index,” he says. “We’re really, really sustainable; really, green.

“We get rid of all the controversial industries, so we have a small investment universe to begin with.”

At any one time, the Griffith Student Investment Fund holds about 30 stocks. “Any investment fund has to have some kind of a benchmark,” Fan says. “The way of judging our performance is by comparing our fund with benchmark. So if the benchmark is doing terribly and we do a little better, we’re still outperforming.”