The Davis Center for Portfolio Management has a mandate that is, in many ways, typical of many student-led investment clubs and funds. Its goal is to manage its investment portfolio – the Flyer Fund – in a manner that adds both financial and educational value. However, the Center takes a unique approach to managing its funds. In addition to the student led team managing its own fund, the team also oversees a portion of donor assets for The Dayton Foundation. As of December 2024, the investment fund has grown to more than $80 million in assets, attributing this growth to three primary areas of focus.
- Educational experience
Founded in 1999, the Davis Center is one of the University of Dayton’s flagship experiential learning programs. Each year, roughly 80 students gain stock analysis and portfolio management skills, currently under the guidance of finance professor Dan Kapusta. The Center is set up to replicate the environment, structure and function of an asset management firm, with professional-level data sources and tools such as Bloomberg, FactSet, Morningstar, and S&P NetAdvantage. While the tools have allowed for an effective learning environment, professionalism runs deeper than just software and equipment.
Each year, new members are interviewed and hired, integrating a professional level of discipline. Last year, about 25 new students were selected out of 50 applicants. Once students are selected, the Center’s training program leads them through a rigorous 10-week internship that focuses on macroeconomic analysis, fundamental research and valuation concepts. The program culminates in a stock selection pitch to the management team. The team’s integral process of hiring and training combined with the necessity of understanding and analyzing emerging opportunities and risks throughout the year are important to achieving program results.
Although continuity can be a stumbling block for college investment clubs, this has not been the case for the Davis Center. Instead of converting the portfolio to a passive, indexed approach during academic breaks, as many other schools do, the leadership team at the Center is actively involved in monitoring the Fund year-round and continuing the program’s implementation and growth process. - Portfolio management
The University of Dayton’s approach to portfolio management applies with at least equal emphasis to how securities are analyzed and how the equity portfolio is managed. As with many asset management firms they emulate, the team seeks to incorporate professionalism, discipline, and debate in their investment process.
To establish a solid investment strategy, the team begins by assessing the U.S. macroeconomic environment. From GDP to inflation to Treasury spreads, the economic backdrop for stock selection is evaluated and incorporated into their decision-making. The team is divided into industry segments, enabling specialization and a deeper level of stock level insight. Security selection follows a GARP (Growth at a Reasonable Price) approach to identifying securities that:
- One, trade at a discount to their discounted cash flow model’s estimates of intrinsic value.
- Two, have qualities that defend against competition and position them for future growth, including sustainable advantage, switching costs, and pricing power.
Through the relationship with The Dayton Foundation, the students gain experience beyond a single asset class. They determine the portfolio’s overall asset allocation and exposure to not only domestic stocks, but international equities, fixed income and real assets. - Connection to community
As with other asset managers, the Flyer Fund’s student management team charges a fee for their investment services for The Dayton Foundation. In this case, however, the fee is not focused on personal gain, as the majority of is donated to community charities of the team’s choosing. Learn more about the impact the Dayton Foundation has on the community here.
For over 100 years individuals, local families, companies and organizations have benefitted from the Foundation’s services through a range of grants and scholarships that have shaped and strengthened the Dayton community. The Flyer Fund team is a proud and active participant in the Foundation’s continued commitment to philanthropy.
While The Flyer Fund program has played a significant role in educating students who participate, it is the program’s dedication to learning, investing and community impact that has achieved financial and educational value. Partnering with nearly 50 higher education institutions across the country, FEG embraces the opportunity to share insights, experiences, and impact stories that inspire continued growth and innovation.
FEG’s intention in sharing this story about the University of Dayton is to provide helpful insights with other student-led investment clubs. While each institution has its unique mission, we believe sharing such industry perspectives can help other institutions glean ideas that they can implement in their own practices.
The information herein was provided by the University and Dayton and the Dayton Foundation. FEG does not guarantee the accuracy or completeness of such information provided by third parties. The information in this presentation is given as of the date indicated and believed to be reliable. FEG assumes no obligation to update this information, or to advise on further developments relating to it.
This article was prepared by Fund Evaluation Group, LLC (FEG), a federally registered investment adviser under the Investment Advisers Act of 1940, as amended, providing non-discretionary and discretionary investment advice to its clients on an individual basis. Registration as an investment adviser does not imply a certain level of skill or training. The oral and written communications of an adviser provide you with information about which you determine to hire or retain an adviser. Fund Evaluation Group, LLC, Form ADV Part 2A & 2B can be obtained by written request directed to: Fund Evaluation Group, LLC, 201 East Fifth Street, Suite 1600, Cincinnati, OH 45202 Attention: Compliance Department.
This information is prepared for informational purposes only. It does not address specific investment objectives, or the financial situation and the particular needs of any person who may receive this presentation. Neither the information nor any opinion expressed in this report constitutes an offer, or an invitation to make an offer, to buy or sell any securities.