Lab offers experimental learning Q) I would like to study finance when I get to college. I was particularly interested to read about Villanova’s finance lab in last week’s column. Could you please tell me more about it? A) In order to answer your question, I interviewed Dr. David Nawrocki, Professor of Finance and Director of the Institute for Research in Advanced Financial Technology (IRAFT) at Villanova University. Jason Katz: For those of my readers who are not familiar with Villanova’s Applied Finance Lab, could you please describe it? David Nawrocki: It's a combination of a classroom, a library, and a computer lab. It contains 12 workstations in the main room with two students working at each workstation. The workstation has access to Reuters Station which provides real-time news, stock quotes, and security analysis. The lab also contains trading simulation programs and lots of corporate, stock, and economic data. We have a research area off to the side where students may work whenever a class is in session. It contains two Bloomberg terminals and a Reuters Station workstation. The lab is very flexible in that we are able to run trading simulations in the lab, have classes meet in the lab, and have it open for general use. JK: Where does the money come from to finance the Student Managed Funds and what is done with the earnings? DN: It is from various donors who believe that experiential learning is one of the best ways for students to learn. The student managed funds are too new to provide a great deal of income; the money that is generated is used to pay for data services, investment newsletters, and printing SMF newsletters and reports. The funds are also used to pay for two pizza parties at a local restaurant for the students. JK: What is the Arnone-Lerer Socially Responsible Investment Fund? How do the students decide which companies to invest in? Which companies are part of the fund? DN: The original donor specified that it be a socially responsible investment fund. In accordance with the donor’s interests, we focus on the environment, human rights, employee relations, corporate governance, as well as the traditional sin areas of tobacco, gambling and alcohol. We start with a study of the macro-economy. This allows us to select different industries that we hope will do well in the current economic environment. We then run all of the companies in those industries through a social responsibility screen using IWFinancial.com. We currently have 50 students active in our SMF classes for academic credit and another 90 students are active managing two of our five funds as members of a student club, the Villanova Equity Society. Our students take a great deal of pride in the portfolios and are very competitive with the S & P 500. |