In Debut Year, Smith Investment Fund Weathers COVID-19 Volatility

The Smith Investment Fund’s student money management team couldn’t have known what kind of year was ahead in May 2019, when they launched its investment portfolio. But the group’s investment decisions nonetheless have weathered the financial storms rather well.

The fund significantly outperformed its benchmark S&P 500 over the period ended May 2020, even amid the volatility brought by the coronavirus pandemic, according to SIF’s 2019-2020 Annual Report. SIF is a student-managed, investment group at the University of Maryland’s Robert H. Smith School of Business. The group has two separate investment teams: fundamental and quantitative. The fundamental team conducts thorough research on public businesses and the quantitative team develops systematic trading strategies.

Maryland Smith’s Ryan Thornburg ’19, Harman Gill ’20, Logan Riegel ’20, and Sean Mathew ’21 founded SIF’s fundamental team in 2018 to provide students with hands-on investing and experiential learning.

“We wanted to create a tight-knit community where we would have continuity and be able to build our alumni network,” Riegel said.

The result: A selective club that provides a four-year learning experience for students to take on various research and investment roles. Currently, there are 15 members on the team.

“This year, we had about 90 applicants,” Mathew explained, “and we chose a handful of them to be part of the team.”

SIF opened its portfolio with holdings in just five companies: HDFC Bank, Zooplus, Match Group, Shopify, and StoneCo. Over the year, it exited its position in Shopify, realizing triple-digit gains. It also sold off its shares in HDFC and StoneCo, explaining in its annual report that the investors “feel as if our competency in these businesses is not as strong and thus, includes higher uncertainty risk.”

The portfolio of late contains just four companies: Match Group, Zooplus and newer positions in Visa and Activision Blizzard.

In the group’s first year of investing, SIF achieved an absolute return of 39.5%, outperforming the S&P 500’s 0.4% return over the same period.

It’s not been an easy time to invest, the group acknowledged in its annual report. “With constant headline news and volatility causing many people to speculate on the recovery of markets and businesses, we take a 10,000 foot-view to our macro-analysis and attempt to shutter out noise; continuing to concentrate our thoughts toward the long-term impact on our businesses,” it said.

When equities took a sharp downturn in March amid economic uncertainty brought by the COVID-19 pandemic, SIF’s investments held relatively steady. SIF notes a strict adherence to risk management and avoiding capital loss through the selection of high-quality businesses.

“Short-term volatility doesn’t scare us and we believe our businesses will come out of this pandemic stronger,” Mathew said. “When we invest in these businesses, we’re looking over a five- to 10-year investment horizon.”

As for the club’s graduating seniors: Gill is headed to work at UBS in New York City, and Riegel will be working at Stifel in Baltimore.

Both say that as new alumni, they plan to give back to the future members of the club, helping to broaden the pathway from Maryland Smith to Wall Street.

“We want to create a richer alumni network where we can help improve recruiting and transparency with these firms,” Gill said.

They plan to increase their connections over the next few years as more SIF members become alumni. “We plan to develop a large alumni network,” Riegel added, “and keeping that organized will be a very important piece of our club.”

For more information about the Smith Investment Fund, go to smithinvestmentfund.com. 

–By Emma Grazado, Maryland Smith special writer