Students invest $500,000 in agricultural commodities
By Lois Caliri
Virginia Tech students are getting hands-on experience in risk and financial management by using $500,000 in real money to invest in agricultural commodities that could yield high returns for the university’s foundation.
The Department of Agricultural and Applied Economics has created the Commodity Investing by Students fund, known as COINS. The program and student scholarships are supported through an endowment created by Bruce and Debbie Holland of New Church, Va. Bruce (agricultural economics ’70) originated the concept for the program and worked with the college and the Virginia Tech Foundation to bring the program to life.
Students in AAEC, along with finance majors in the Pamplin College of Business, run the fund with guidance from faculty advisers. Each of the 12 students is responsible for overseeing an agricultural commodity such as corn, soybeans, or livestock. They look for trends, including weather patterns, political developments, crop diseases, and other factors that impact commodity prices.
Students make their recommendations to the advisers, who place the trades with a broker.
“The student-run fund provides hands-on opportunities for students to perform supply-and-demand analyses of agricultural commodities while also learning how to create, monitor, and adjust an investment portfolio,” said Hyrum Smith, assistant professor of AAEC and faculty adviser to the students. “As far as I am aware, this is the only student-run agricultural commodities fund in the nation.”
Though no course credits are given, students appreciate the unique opportunity that COINS offers.
“We’re able to make decisions with real money, and we will have a leg up in the highly competitive money management market,” said Nathan Butler of Midland, Va., a junior majoring in AAEC.
Students are investing in exchange-traded funds, which are similar to mutual funds. Mutual funds are created when a company brings together money from many people and invests it primarily in stocks, bonds, or other assets. The difference is that exchange-traded funds can be traded throughout the day, are less volatile than individual stocks, and are cheaper than most mutual funds.
“With this experience, students reinforce concepts and theories learned in class, think strategically, and create investment strategies that could benefit the university,” said Jason Grant, assistant professor of AAEC and a student adviser.