Millikin's Tabor Investment Portfolio reaches milestone in asset value

Through investment class, students experience real risk and real reward

It's a Monday afternoon in early October on the campus of Millikin University. Classes and activities are off and running as the beginning of another busy week takes shape. At the very same time, several business students are sitting in ADM-Scovill Hall tracking worldly events that could affect the almost 50 domestic equity stocks they are actively managing.

These business students are not just taking part in a prototypical college class – this is an investment management group – the Tabor Investment Portfolio (TIP).

The Tabor Investment Portfolio is run by a group of students in Millikin's Tabor School of Business under the guidance and supervision of the Board of Trustees. The students come together to not only study the current economic landscape, but each student provides a presentation of a particular company that they recommend investing in. The students analyze the portfolio, evaluate the securities of the portfolio and they decide if they should buy new stocks or sell them.

The Tabor Investment Portfolio arrived at Millikin in 2010 when the Millikin Board approved an initial funding of $100,000 allocated from funds raised through Millikin's Project Confirm. Since 2010, the portfolio size has grown consistently and slightly outperformed the Russell 3000 benchmark (a capitalization-weighted stock market index) over longer time periods. The Tabor Investment Portfolio's current asset value is approximately $500,000 in size.  

"When the Board of Trustees made a commitment to allocate $100,000 to the Tabor Investment Portfolio in 2010, it sent the signal that Performance Learning in the Tabor School was serious business," said RJ Podeschi, interim dean of the Tabor School of Business.

The students are led by faculty advisor Daniel Allen, Class of 1986. Allen is a retired chief investment officer who previously worked for State Universities Retirement System of Illinois and Illinois Power Company.

"The portfolio is managed in compliance with the Investment Policy approved by the Millikin University Investment Committee," said Allen. The Russell 3000 is comprised of 11 sectors which all are represented in the Tabor Investment Portfolio. "The students incur real time experiences of the volatility of the markets," Allen noted. "The portfolio reflects both the successful investments purchased as well as disappointments which can and do occur."

Through this opportunity, students have the privilege of experiencing real risk and real reward. Yes, there is the risk of losing money just like any investment, but the students are being evaluated by the Millikin Board of Trustees on their ability to beat the market index – like a fund manager.

"The course reflects the opportunities and challenges of actively managing a portfolio with the goal of outperforming the Russell 3000 benchmark net of investment fees," Allen said. "The experience of managing a pool of assets should benefit the students as they move into their careers. It should also benefit the students by providing skills in managing or monitoring their individual investment portfolios."

One of those students is senior finance major Julia Zmucki, of Lockport, Ill., who also serves as president of the Tabor Student Advisory Council. For Zmucki, the experience has been great because she is currently studying to be in the financial investing industry.

"All that I am doing in the class is giving me the opportunity to work with what I could be working with in the future," Zmucki said.

In terms of investment decisions, Zmucki says the class looks at stability, earnings growth, debt-to-equity ratio, dividends and price-to-earnings ratio. "Some of the most important learning experiences are that a stock changes so much that you will never be able to predict what is going to happen. I also learned that one month can change the portfolio a lot," she said.

Among the many things that changed the outlook of the portfolio has been the COVID-19 pandemic. Investment practices during the pandemic have shown that markets are unpredictable over a short time period. "It is important to maintain a longer-term time period frame of mind," Allen said.

The largest holdings currently in the Tabor Investment Portfolio, as of Sept. 30, 2021, are Microsoft, Apple, Alphabet, United Heath Group and Amazon. According to Allen, the information technology sector has performed strongly as well as the consumer discretionary sector (Nike, McDonald's). The energy sector has struggled over longer time periods, however, over the past year, it has been the top performer. Other sectors that have not outperformed the index over longer time periods include the utilities, consumer staples and real estate sectors.

"Markets can be volatile in the short term, but over time, quality investments, if purchased when appropriate, have a high likelihood of outperforming the stated investment benchmark," Allen said.

The portfolio experience is incorporated into the existing three-semester Finance course sequence through the Tabor School of Business curriculum. The experience comes off as unique because it helps the students connect the dots between what they learned throughout their freshmen, sophomore and junior years.

Based on the results, the students are getting an all-encompassing view and understanding of the financial market.

"For students to consistently do as well as or better than the benchmark index, Russell 3000, over 10 years, is a real testament to this Performance Learning initiative," Podeschi said. "Seeing the fund break through the $500,000 barrier is a significant milestone, and the good work of all the students involved over the years should be celebrated."