You may well be spoilt for choice when it comes to the selection of societies and extra-curricular activities on offer at university. But while opportunities to have fun, make new friends, and explore your talents abound, how many student societies can give you real exposure to the financial markets, help you to develop key skills that could kick-start your career in finance, and perhaps even earn you a bit of cash along the way? Final-year physics student at the University of Nottingham, Joe Davis, has founded a group that ticks each of those boxes: the Nottingham Undergraduate Equity Fund (NUEF), a student-financed and student-managed stock market investment fund.
The idea to set up a student-friendly means of investing came to Joe in autumn 2010, when he started investing small sums of money through an online broker. It was one thing to see if he could make his student loan grow rather than shrink over the course of the term, but it would be quite another to pool together the cash and knowledge of a group of students interested in finance, and invest strategically in a diversified portfolio to gain a competitive return.
Joe sent out emails across the university to gage the level of interest among students in investing, and then got together with three other students in January 2011 to begin organising the equity fund. Due to start investing this term, the NUEF pools investments of £200 each from an unlimited number of students, known as passive investors. It also has a core team of 60 students to manage the equity fund on a day-to-day basis, by researching and appraising investment opportunities, and by collectively making decisions about which shares to invest in. "We've tried to structure the equity fund in the fairest way possible," explains Joe. "In order to function efficiently, it's necessary to have a small hierarchy, but I've also tried to ensure that everyone is represented and gets to play a role in decision-making."
In addition to planning how the fund would operate, Joe also worked hard to secure a deal with Selftrade, one of Europe's leading stockbrokers, which has agreed to provide commission-free trades to the NUEF. Joe says:"It gives us the freedom to buy and sell shares when we want to, without having to factor in the cost of a hefty commission fee, which could eat into the fund very quickly."
Don't you need lots of experience to start investing? To get involved in the NUEF as an active investor, all you need is £200, an interest in finance, and enthusiasm to learn. "Everyone has to invest the same amount, so that everyone has an equal say in making decisions," explains Joe. "And, when the fund is liquidated at the end of the academic year, the returns will be split evenly between everyone." The objective of the equity fund isn't to make millions, but to create an experience that will allow students to improve their understanding of financial markets, and to develop skills that will help them in the job market.
"I've explained to everyone who's shown an interest that if they're here just to make money, they're here for the wrong reasons!" Joe says. "If we're lucky enough to make a 10 per cent return, which would be incredible in the current climate, that's still only £20 per person at the end of the year."
Investing in the equity fund isn't a substitute for a part-time job, but Joe hopes it will enable students to learn from each other, strengthen their CVs, and meet other students with similar interests.
Joe's keen to run his own business in the future, and he says setting up the equity fund has been an exciting and valuable experience for him. "It's teaching me to be very organised, and to pay close attention to detail. I've realised that there are so many little things to consider when founding an organisation - especially one involving other peoples' money!" With the help of the other executive members, Joe has worked hard to write a watertight constitution that specifies the terms of investing in the equity fund, which include signing an acknowledgement of the risks involved, and agreeing that you can't withdraw your cash until the fund is liquidated in June.
After almost a year of devotion to set up the NUEF, the fund is ready to get off the ground and 170 students have expressed an interest in investing. "If each one of them ultimately invests, that's £34,000!" says Joe excitedly. Although he's wary of setting targets or making promises to investors, Joe is quietly confident that the NUEF will make a small profit, at least.