Columbia Launches First Student-Run Portfolio Fund

Columbia Business School has launched its first student-led value investing portfolio, known as the 5x5x5 Student Value Investment Fund. The fund, named for its innovative structure, gives students the opportunity to connect value-oriented investment theories to real-world practice as they apply their classroom learning to the management of this fund.

“Five by five by five arose from my long-held belief that students ought to have an opportunity to derive deep and lasting lessons from student investment funds,” said  Thomas Russo, who has funded the gift and is also an advisory board member for the Heilbrunn Center for Graham & Dodd Investing at Columbia Business School.

The biggest lessons occur over time. The fund is trying to get investors’ horizons stretched out beyond five minutes, five days or even five quarters. I want the 5x5x5 portfolio to succeed and underscore the message that long-term investing is actually a worthy and profitable pursuit, Russo says.

Investment ideas for the portfolio are submitted by students in the School’s Value Investing course taught by Professors Bruce Greenwald and Tano Santos, faculty directors of the Heilbrunn Center for Graham & Dodd Investing. Each year, five students will be selected to participate in the management of the fund based on the strength of their proposed investments.

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Companies pitched should be capable of delivering compound returns over a five-year holding period and students must provide no more than five clearly expressed, understandable, and brief reasons for their selection. The top 15 student recommendations will be submitted to the fund’s investment board, which will vote each year on the five new investments to be included in the portfolio.

Five new investments will be added yearly and by the fifth year, the fund will be comprised of a total of 25 investments. At the end of the five-year holding period, each selected investment will be liquidated to provide capital for future 5x5x5 fund participants to invest. The monetary amount will be increased to adjust for inflation, and the remainder of any gains will be used for student scholarships.

Each student participant has been requested to make a five-year commitment to return to Columbia each year to personally interact with the new student managers. “Each new class of student investors will have the benefit of hearing from the original sponsors of earlier portfolio selections why investments have or have not performed according to expectations,” said Meredith Trivedi, administrative director of the Heilbrunn Center.

Russo’s desire to help form and nurture the next generation of value investors prompted the donation. “I wanted to respect Columbia Business School with this gift for the great education that has been offered to so many people I have revered within the value investment community over so many years.”

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