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Into the Archives: a correspondence on divestment

in Into the Archives by

On June 17, 1985, recent alum Perry Chang wrote a handwritten note to then-president of the College David Fraser. The note read:

“Dear President Fraser: I would be interested to receive a response to the letter I handed to you at Commencement. I have enclosed a copy of that letter, which I helped draft. Hope you are having a pleasant summer. Sincerely, Perry Chang.”

The letter enclosed, written by Chang and a few other students who had graduated in 1985, was a call for divestment from companies doing business in South Africa under Apartheid.

“Many of us wear armbands today to remind both College officials and our friends, family, teachers, and fellow students about the deteriorating situation in South Africa and what role the College might play in improving the situation … during the past four years at Swarthmore we have become more and more familiar — through films, course work, symposiums, and even late-night discussions — with the apartheid system of South Africa,” Chang and others wrote.

They then urged President Fraser to take two specific actions. First, to contact the College’s Ad Hoc Committee on Ethics and Investments, created a the year prior, and urge them to support a new provision. This provision reconsidered the College’s policy since 1978, which established that the College would maintain investments in South Africa as long as they followed the “Sullivan Principles,” which the Swarthmore Anti-Apartheid committee considered to be a cover for companies wanting to stay in South Africa. The second thing the students urged was for Fraser to publicly support the proposed Anti-Apartheid Act of 1985 being considered by Congress.

“We believe the time is ripe for action on the apartheid issue,” the last paragraph of the letter reads. “In South Africa, things grow worse every day. Over here, the “Free South Africa” gains steam, in college campuses and in the halls of Congress. Both the situation in South Africa and the movement here cry out for us to act now. As students here for the past four years, we have waited patiently as the College has put this issue through the slow mechanism of its formal committees. We are running out of patience.”

Chang and others ended with a concrete consequence for the college if it did not divest.

And we suspect that, should the Ethics and Investments Committee effort go nowhere over the summer, next year many of us will likely support the establishment of an “alternative endowment” — a pool of alumni contributions which will not be released to the College until it divests — and younger students who remain at Swarthmore will likely lose faith in the College’s established mechanism for change and opt for a different mechanism. The time for you and the College to act is now.”  

On June 28, 1985, President Fraser sent a letter back to Chang. In his letter, he outlined his dismay for the situation.

“Dear Perry: I welcome the chance to make a personal reply to the letter that you and your classmates gave to Gene Lang and me during the Commencement ceremonies. In the letter you raise important issues of what the College’s and our government’s responses should be to the dreadful system of legislated racism that was built up in South Africa forty or fifty years ago, and continues largely in place despite some recent marginal improvements … The College wrestles with a variely of issues including whether it should be a locus of debate or a debator, whether to use its investments as a polítical or moral statement would compromise its fiduciary responsibilities, and how the College might use its investments most efficiently in effecting change in South Africa.”

Fraser also outlined recent discussions in Washington on Apartheid.

“I spent Wednesday in Washington with a group of college and university presidents debating these issues and cross examining Senator Paul Sarbanes and Assistant Secretary of State Chester Crocker (who have, as I suspect you know, markedly differing views). Crocker argues that the oppression of blacks ín South Africa is lessening, and that our leverage is greater if we are ‘constructively engaged,’ and that forces are already in place that will lead to the dismantling of apartheid in the relatively near future. I find myself unconvinced that our engagement has cause much improvement in the situation of blacks in South Africa, because I do not see that the situation has improved much. I have a harder time judging the validity of his assertion that things will now improve fairly rapidly — I worry that the Botha government is changing things about as quickly as the Afrikaners will permit and that in the present climate only revolution will bring rapid change.”

Despite this, Fraser explained that he was not personally yet convinced that the College would do better to follow total divestment, and that he looked to the committee of guidance. He did accept the second demand, and publicly expressed support for the passage of the Anti-Apartheid Act of 1985, however warning that this did not commit the college itself to a particular stand.

In 1986, the Anti-Apartheid Act passed in congress and the College board of managers reached a decision to proceed toward full divestment. Full divestment was reached in 1990. Apartheid legislation in South Africa was outlawed in 1991.

The process, though, was a long and halting one; Chang and President Fraser’s exchange is a mere slice. Next issue, I’ll outline the actual process of the College’s progress toward apartheid divestment.

In many ways, this process can be seen as analogous to the current movement for divestment from fossil fuels: in April of 1985, before the Committee came to a decision, the College held a referendum in which 79% of the students who voted called for total divestment to replace the Sullivan principles. Mountain Justice held a similar referendum last year. Then and now, divestment is no easy process — hoops must be jumped through; drawbacks must be considered. Even so, morality in investment has been a question the College has been struggling with for decades and will, I predict, for years to come.

 

*Chang and Fraser’s letters are courtesy of the Friend’s Historical Library

Board defends conflict of interest in investments

in News by

An established conflict of interest on Swarthmore’s Board of Managers may be neither inconsequential nor coincidental. In the fall of 2013, the Board of Managers formally announced that they would not divest from fossil fuels because they predicted a loss of return on the endowment that, they claimed, would cost the college $204 million over ten years. The decision was reached by the investment committee of the Board of Managers and through consulting with outside advising firms that both manage the college’s financial risk and create a plan for endowment spending.

Marshfield Associates was the third highest-paid investment advisory firm hired by the college in 2011, receiving a consulting fee of $191,381. Cambridge Associates, the highest-paid consulting firm hired by the college, was paid $738,084 in the same year.

A portion of Swarthmore’s endowment is also invested with Marshfield Associates. Christopher Niemczewski ’74, a member of the college’s Board of Managers, founded Marshfield Associates in June 1989 and remains the president of the company. Niemczewski, as a principal manager, owns between 25 and 50 percent of the company, according to Marshfield’s own public reports.

Niemczewski is chair of Swarthmore’s investment committee, which is responsible for investing the endowment and finding external consultants and managers to invest and manage the endowment. The school has been a client of Marshfield Associates since at least 2002, and Niemczewski became chair of the investment committee in 2007. Niemczewski also holds positions on the executive committee, the development and communications committee, the compensation committee, the committee on investor responsibility and the property committee. Niemczewski declined to comment for this article, and the Phoenix received no response from any representative from Marshfield Associates.

In a 2005 bylaw to the Board’s conflict of interest policy, financial conflicts of interests in which investment committee members stood to profit from investments were prohibited. The addition states, “As a matter of policy, the Investment Committee will not make new investments in separately managed accounts, partnerships, commingled funds, or other investment vehicles with investment firms in which an Investment Committee member has an ownership interest or employment relationship and the potential to profit directly from such investment.”

However, the policy does allow exceptions if the investment is determined to be in the best interests of the college.

The policy allows for pre-existing conflicts of interest of the aforementioned nature: “With respect to relationships in which, as of the date of this policy, a conflict of interest already exists, or in which a conflict arises upon an individual becoming a member of the Investment Committee, the individual involved shall disclose such conflict to the Audit Subcommittee at least annually, shall disclose such conflict to the Investment Committee in every discussion pertaining to the particular investment, and shall excuse him- or herself from discussions in which decisions involving the particular investment are made.” The Audit Subcommittee has since been upgraded to the Audit and Risk Management committee, which holds the same responsibility as outlined in the policy.

Thus, according to the policy’s bylaws, the relationships Niemczewski holds to his firm and the investment committee are allowed as long as he discloses the conflict annually and recuses himself when Marshfield Associates is discussed. Gil Kemp ’72, chair of the board of managers, who has previously chaired the audit and risk management committee, confirmed that Niemczewski does both of these things. However, Kemp stated that Niemczewski is under the same scrutiny as any other potential conflict of interest.

“Clearly there is the potential that Chris is involved in a deal where his firm is profiting … It surfaces as having that potential, and that’s why the audit committee reviews any potential conflict and chooses to set up procedures or not,” said Kemp.

“We have, I think, a very detailed conflict of interest procedure,” he added. “…Every summer each board member has to complete a pretty detailed survey that reveals any potential conflict of interest that board member might have and then is reviewed very carefully by Greg Brown — previously Sue Welsh — and any potential conflicts are brought to the attention of the audit subcommittee.” Brown replaced Sue Welsh in June, the end of the 2014 fiscal year, as vice president for finance and administration.

“And it’s a minor part of the endowment,” added Kemp, in reference to the portion of the endowment directly managed by Marshfield.

“It is very explicit that he has to be — in formal language — recused from investment meetings involving Marshfield,” Kemp explained. “I’ve been at one of the meetings in which Marshfield was brought up, and he got up and left the room … He’s out of the room and not part of any decision to use or not use Marshfield.”

Katie McChesney, an organizer for 350.org, a climate-focused activist organization, believes the implications of the conflict of interest on the board are not innocuous for the college’s financial decisions.

“Especially if the board’s bylaws actually reflect on fiduciary responsibility as the key argument for why they make the choices that they’re making, I think this conflict of interest really clouds the reliability of the board’s decision making process because it’s impossible to know what’s being weighted where … and what the priorities are based on this conflict of interest,” she said.

Mark Kuperberg, professor of economics, also believes the conflict of interest has an impact on the college’s investment decisions. Although he emphasized that legally, the policy is sound, and that Niemczewski likely believes he is working in the best interests of the college, he still thinks that the relationship is subject to bias.

“…As a matter of policy, I think it is wrong for the college to invest funds with, and

pay management fees to, firms that are owned by members of the investment committee of the Board of Managers,” Kuperberg said. For Kuperberg, the problem lies in Niemczewski’s directly profiting in any amount from Swarthmore’s investments.

“It doesn’t matter what kind of fund he’s running, it’s an issue that he’s on our board and we’re putting money into his fund and his company’s getting fees, that’s where the conflict of interest is. He could own 100% of his company or he could own 10% of his company. It would still be a conflict of interest if he’s on our board and we’re putting money in his company in my view,” he elaborated.

The Board of Managers, however, seems to see the relationship as largely beneficial.

“We make sure we have our endowment managed by the most capable manager we can find and it’s an absolutely essentially review process and Marshfield has to go through the same process… They have to prove themselves just the way any manager does,” said Kemp.

The Board’s rationale for investing with Marshfield despite the conflict of interest with Niemczewski is that they perform better than average with Swarthmore’s investments. According to Kemp, If Marshfield were to perform less favorably, they would go through the same review process any manager would go through.

“Nobody can guarantee that past performance can guarantee future performance, but for many, many years we have outperformed the averages and that’s a very critical part of our institutional success,” said Kemp.

Kuperberg, however, does not find this explanation compelling.

“We maintain all our people do better than average,” he said. “That whole debate is an unresolved thing in my mind. And if they do better than average do they do better than average every year and how many years have they done better than average?”

“Board members who are not involved in investment decisions, I think we could invest in their companies,” said Kuperberg. “I know we could say that Chris Niemczewsky is excusing himself so he’s not involved in that decision, but he’s involved in all the other decisions. … So I think it’s different.”

Kemp emphasized the college’s transparency regarding Niemczewski’s conflict of interest.

“It’s not private, our assumption is that anybody can look at it,” said Kemp.

Why endowment policy needs community input

in Op-Eds/Opinions by

In Swarthmore College’s response (Suzanne Welsh, The Phoenix, March 27, 2014) to my op-ed concerning endowment spending (Peter Collings, The Phoenix, March 20, 2014), the College admits to an intentional endowment spending policy “lower than many other institutions.” The response then goes on to say: “This discipline in the past has served the current generation well and maintains intergenerational equity for the future.”

Clearly the college does not understand the principle of intergenerational equity, namely that the endowment should be used in a way that brings equal resources to each generation of students, faculty and staff.  On the contrary, the response states: “A lower spending rate enables higher annual growth in spending in future years …”, which is exactly the opposite of spending equally on each generation. In fact, there’s a sad irony associated with the college’s policy. By spending less of the endowment each year than necessary for conservative financial sustainability, the college does treat each generation equally ….. equally underfunded compared to future generations!

 The argument in the response that the cost of delivering a Swarthmore education increases faster than inflation is probably accurate. I also agree that the college should plan conservatively in order to guarantee future generations the same quality of education. With these in mind, the difference between conservative financial planning that adheres to the principle of intergenerational equity and the college’s present endowment spending policy is probably in the 1-2 percent range. That might not seem like much, but it amounts to roughly $15-30 million annually, a sum that would have made a significant difference to every student, faculty member and staff member during the last quarter century had it been spent.

 My conclusion is that the college needs to hear from members of the Swarthmore community with a different perspective on endowment spending and intergenerational equity . A discussion of the endowment spending policy is scheduled for a faculty meeting this spring. I call on students, staff and alumni to begin similar discussions, with the goal of forwarding to the college recommendations on endowment spending.

Peter Collings is the Morris L. Clothier Professor of Physics at the college, and serves as the coordinator of Environmental Studies. 

The meaning of intergenerational equality: The impressive resilience, growth and impact of Swarthmore’s endowment

in Letter to the Editor/Opinions by

To the editor,

As an alum and an independent school finance officer, I read with great interest Peter Collings’ two op-ed pieces and Suzanne Welsh’s response on Swarthmore’s endowment spending. They have raised interesting questions about the meaning of intergenerational “equity,” but they have not hit the nail squarely on its head.

Intergenerational equity is achieved when the “impact” of the endowment is maintained over many 25-year generations and is also poised to do so “in perpetuity.”  So, the measure of intergenerational equity we should look for is the percentage of overall expenses and investments that are supported by endowment funding over a longer timeline than one 25-year generation.

So, the proper questions are: (1) How has the role/impact of the endowment changed over the last 50 or 100 years; (2) how has this changing role/impact correlated with increasing quality; and (3) how does the school visualize the endowment’s role/impact to change over the next generation of college growth?

I totally respect Peter’s interest in insisting that the endowment take adequate care of current needs — that is, the “equity” interest of today’s students and professors.  Peter has correctly noted that Swarthmore is fairly conservative in average “actual” spending rate and also that other quality schools often spend as much as 1 percent more.

Peter’s comparing average rates of gain to average spending rates does show a strong Board commitment to growing the endowment, but it does not prove that intergenerational equity has been ill served. In particular, Peter states, “… the dashed line on the graph shows the average endowment return minus inflation… Perfect intergenerational equity would place this line on top of the spending rate data…” This statement is wrong. It would only be true if the College was in stasis and merely worried about simple inflation.  In fact, the College has created, maintained and enhanced its excellence over multiple generations only through innovation, adaptation and growth.  To meet these constant and ever growing challenges, the endowment has had to reinvest its gains as well as spend them.

As Peter continues with his comparative logic he implicitly assumes that there is greater intergenerational wisdom built into Swarthmore’s initial “policy targets” and into the other colleges current spending practices than there is in the results of our Board of Managers’ year-to-year judgements. Then through substitution, Peter has concluded that the college’s actual practices must be “inequitable” because the others are supposedly “equitable” on an multi-generational scale. This implication is made without adequate supporting proof.

Therefore, Peter’s belief that Swarthmore’s Future is being favored over its Today remains a complaint in search of an argument.  I suspect that what may be taken in the moment as cold-hearted penny-pinching by the Board is truly cold-eyed anticipation of the future.  I wouldn’t call it simply “Prudent,” either. As Blake says, “Prudence is a rich, ugly old maid courted by Incapacity” and Swarthmore’s investment managers have clearly demonstrated an extremely steady capacity.

Ironically, most discussions of intergenerational equity focus on spending too much on current needs, not too little!  Indeed, at an Endowment Institute I attended that was sponsored by the Commonfund (a non-profit management company for college endowments), it was amply demonstrated that spending rates above 4 or 4.5 percent could not be sustained over the long run without the accumulation of new capital (new gifts).  In other words, many colleges may be spending themselves into corners that will restrict future quality and choice.  I do not think the Board of Managers can be faulted for not joining what may be a run of lemmings to the sea.

Suzanne Welsh gave convincing support for Swarthmore’s slightly tight-fisted spending policy including (1) the consistently higher rate of inflation in higher ed, (2) Swarthmore’s historic challenges in raising new endowment funds, and (3) the reluctance of new donors to give new money to solve old problems.  All of these arguments support a lower spending rate, and that lower spending rate definitely facilitates more growth for the future.

Perhaps, Suzanne can show us the history that led our Board’s investment genies to follow their lower-than-average spending rate.  She can also show us projections that demonstrate how a higher spending rate could lead to shrinking endowment impact on future budgets. Perhaps, Suzanne needs to demonstrate that protecting the endowment’s mission “in perpetuity” is indeed, a heavy task.

From my perspective, Swarthmore’s endowment is performing Herculean work in supporting endowed professorships (I’m told a greater proportion of Swarthmore’s faculty than at most colleges), substantial employee benefits (my school has bought excellent health insurance alongside Swarthmore for years) and generous financial aid for students.  The endowment’s resilience and growth have been impressive over many years; the endowment’s impact over many years has been powerful.

That Swarthmore’s “conservative” spending rate can do all this AND still build for the future is to be admired.  Most of academia would love to pinch its little toes into those pretty, if-somewhat-tight, shoes!


Bob Mueller ‘68
Chief Financial Officer
Delaware Valley Friends School

SwatTank, The College’s First Business Competition

in Around Campus/News by

Swarthmore students who wish to turn their business ideas into reality will soon be able to. Divided into three phases, each containing business seminars and a round of selection, SwatTank, the first business-plan competition at Swarthmore, will provide students with a platform and guidance from alumni to transform their innovative thoughts into well-formed business plans.

The application of the competition, which is currently available online and will open to students till December 8, asks candidates to describe their business ideas, the problems their businesses may solve and the potential solutions. The applicants also need to show the financial feasibility and sustainability of their plans and persuade judges why they should invest in the projects.

The first webinar on idea generation and team building, open to all students on campus, will be held on December 1 and will be led by Cathy Polinsky ’99, senior director of software development at SalesForce, and Chuck Groom ’00, head of engineering for SurveyMonkey’s Seattle office. Aiming to provide teams with resources to enable them to fully formulate their ideas, the first phase of the contest will have alumni judges selecting 10 teams based on the viability and quality of ideas.

These 10 teams will go on to the second phase of the competition. During this process, each of them will form their business plans with the help of an alum mentor. After hearing seminars on financing and sustaining a startup, creating a business plan and networking, each team will submit their plans at the end of this period and four teams will get into the final round of the competition.

The final phase is scheduled on March 23, 2013, the last day of the Lax Conference for Entrepreneurship. The teams will pitch their ideas to possible partners and investors in up to five minutes and will answer judges’ questions afterwards. The winner will be awarded a prize of $500 to $1500, depending on the team’s size. One person team will be awarded $500, two-person team $1000 and teams with three or more $1500.

The structure of SwatTank got its inspiration from the various forms of different competitions in both large universities and liberal arts schools. “We ultimately merged them into a competition that best suited Swarthmore,” Aldo Frosinini ’15, Co-President of the club, said.

“Swarthmore students will finally have a vehicle for developing winning business plans and funding their ideas earlier on in their career,” said Lisandra Lamboy ’03, a National Urban Fellow serving as Special Assistant to the Director of the Houston Department of Health and Human Services. Lamboy came up with the idea of having such a business competition and believes that entrepreneurs at Swarthmore will develop social enterprises that can greatly contribute to the Swarthmore community and beyond if given proper support and platform.

Antony Kaguara ’15, a member of the Entrepreneurship Club, agrees with Lamboy. “If students can understand from an early stage how to develop their ideas, they can be the dynamic business leaders of tomorrow,” he said. “Entrepreneurship is going to define the workforce in the future.”

Kaguara met Lamboy during last year’s Lax Conference, where he first learned of her competition idea. After talking to Career Services staff, the club was told that the office was also thinking about organizing a similar event. Co-sponsored by the Career Services Office, the Dean’s Office, the President’s Office, the Center for Innovation & Leadership, the Lax Conference for Entrepreneurship and the Entrepreneurship Club, SwatTank will be more than just a competition. “We have designed it to be beneficial, win or loss,” said Marisa Lopez ’15, co-president of the Entrepreneurship Club.

“Students who participate in SwatTank will finish with more networking experience, improved communication skills, and the knowledge of how to be a better team player,” Lopez said.

Lopez does not see a strong enough awareness in the college about the benefits of entrepreneurship. “Being an entrepreneur is not just starting a company or coming up with some new design, it is a way of thinking,” she said. She appreciates “intrapreneurship,” which refers to behaving as an entrepreneur within an existing company, and hopes to learn how to think like an entrepreneur.

SwatTank will be holding an information session tonight at 8 pm in Science Center 199.

Swarthmore’s Investment Practices Questioned

in Around Campus/News by

At 12:40 p.m. on Tuesday, six students went to the Investment Office with a list of 40 companies they identified as ethically objectionable, wanting to know whether the College is or has invested in any of them before. Students for Peace and Justice in Palestine, or SPJP, who organized the initiative, researched companies that not only contribute to the Israeli occupation of the West Bank and Gaza, but also ones involved in fossil fuel, tobacco and arms production.Suzanne Welsh, the Vice President for Finance and Treasurer of the College, was expecting the students, who greeted and immediately handed her the prepared list of companies.

Danny Hirschel-Burns ’14, member of SPJP, spearheaded the meeting, and told Welsh that SPJP, along with many other student organizations on campus, wanted to know if Swarthmore has invested in companies like Motorola, Caterpillar, Philip Morris USA, Wal-Mart and ExxonMobil — all of which are, in their view, implicated in human rights violations across the world in some way or another.

Swarthmore, however, does not disclose its investment portfolio except to the Committee on Investor Responsibility. Welsh explained that the College hires a firm to handle part of the endowment, which the firm in turn invests.

“We give them an allocation of money from the endowment and they are buying and selling shares,” she said. “They have leeway within their specific mandate.”

Still, she agreed she would try to do what she could to provide the names of companies Swarthmore has invested in the last quarter.

According to SPJP members Sarah Dwider ’13 and Benjamin Bernard-Herman ’14, in the process of learning about the College’s investment practices, SPJP found out that Swarthmore does not screen the companies they invest in for ethical concerns.

“Most colleges have their endowment managers screen for some kinds of companies, which means that the college tells the people who manage their investments that there are certain companies that for moral or ethical reasons are irresponsible to invest in and therefore the college shouldn’t,” Bernard-Herman said. “The most well known industry-standard screens are for tobacco companies and arms manufacturers. Swarthmore is anomalous in that it doesn’t screen for either.”

Dwider says that they initially started looking at investment issues directly related to SPJP’s mission by finding companies that make a profit from the human rights violations taking place in the West Bank and Gaza. Some of these provide technology that enables the Israeli occupation (like bulldozers that aid home demolitions) or grow products illegally on the land. In the midst of the investigation, however, SPJP realized this movement can’t just be about Occupation-related companies.

“We realized this is a structural problem in the investment practices of the College as a whole,” she said. “The ultimate idea is to open a discussion about how the College invests money and to create a space for students to approach the Investment Office and say, ‘Look, we have a problem with this company, this industry. We think that as an institution of Quaker roots, it’s unacceptable that we’d be profiting from this,’ and then get into some kind of discussion about making this into an established screen and adding certain criteria until changes are made.”
Both Dwider and Bernard-Herman think that it is unlike Swarthmore to have such a policy regarding its investment practices.

“It’s not unheard of or difficult to have the people that you are paying to invest your money screen [companies],” Dwider said.

It is possibly for this exact reason that Welsh questioned the students’ motives for wanting to know about the College’s investment in these companies.

“Any given day we could own any of these companies [on the list] and the next day we could not own them,” Welsh said. “So I don’t know that it’s relevant which ones we actually own but our policy itself.”

The VP for Finance asked the students present if they’d be willing to send a more detailed list with all of the practices the group found questionable for each of the 40 companies on the list, some of which are domestic, and others international. She plans on sharing these concerns with the Committee on Investor Responsibility, which meets in the spring.

According to Bernard-Herman, this meeting can result in a couple of things.

“If it turns out that we are invested in companies that profit from the Occupation, we could compel the college to find a shareholder resolution, asking those companies to stop contracting with Israeli operations in the West Bank and Gaza,” he said. “If that fails, or the resolution gets thrown out, then other options like a divestment campaign start to look more reasonable.”

SPJP Marches to Demand Investment Transparency

in Breaking News/News by
At 12:40 p.m. on Tuesday, six students marched up to the Investment Office with a list of 40 companies they identified as ethically objectionable, demanding to know whether the College is or has invested in any of them before. Students for Peace and Justice in Palestine, or SPJP, who organized the initiative, researched companies that not only contribute to the Israeli occupation of the West Bank and Gaza, but also ones involved in fossil fuel, tobacco and arms production.

Suzanne Welsh, the Vice President for Finance and Treasurer of the College, was expecting the students, who greeted and immediately handed her the prepared list of companies.

Danny Hirschel-Burns ’14, member of SPJP, spearheaded the meeting, and told Welsh that SPJP, along with many other student organizations on campus, wanted to know if Swarthmore has invested in companies like Motorola, Caterpillar, Philip Morris USA, Wal-Mart and ExxonMobil — all of which are, in their view, implicated in human rights violations across the world in some way or another.

Swarthmore, however, does not disclose its investment portfolio except to the Committee on Investor Responsibility. Welsh explained that the College hires a firm to handle part of the endowment, which the firm in turn, invests.

Read the complete story in this Thursday’s issue of The Phoenix!

App and Investment Clubs New on Campus

in Around Campus/News by

Swarthmore College’s already prodigious list of student-run organizations has expanded even further this semester with the revival of the previously dormant Investment Club and the foundation of the App Club.

Although both focus on highly lucrative industries, neither clubs’ immediate interests seem to be solely pecuniary. Both hope to provide students interested in these industries with opportunities to expand their skill set and apply what they’ve learned in the classroom to more real-life problems and scenarios.

“The mission of our club is to provide interested Swarthmore students with the opportunity to learn and become better investors. Along the way, I hope to convince my peers that investing can be a rewarding, stimulating, and socially beneficial career,” Investment Club Co-President Adam Silver ’14 said.

Investment Club’s main activities will involve members working together to maintain a mock portfolio of equities and fixed income, with the ultimate goal of outperforming set benchmarks for each class of assets. The club is currently in the process of selecting members that will be responsible for specific asset classes.

The club also hopes to educate members on specific investment strategies and techniques. At the club’s meeting on the 21st, Financial Analyst Nathan Newport of the College Investment Office described the school’s approach to managing its endowment and offered suggestions for managing the club’s mock portfolio. At the upcoming meeting, Co-President Aliya Padamsee ’14 will present a “practical, technical approach to risk-averse trading.”

Discussions of assigned reading material such as Burton Malakiel’s A Random Walk Down Wall Street, a classic financial text analyzing various investment techniques and stock market behavior, will also play a prominent part.

Working in a similar vein, the App Club seeks to augment members’ classroom knowledge with hands-on approach to product development. “The Computer Science department at Swarthmore is great, but it focuses mainly on CS theory. Our club offers the unique chance to apply the theory to reality, and create some really cool stuff along the way,” the club stated in a group email.

Like the Investment Club, the profits App Club hopes to earn seem to be mostly intangible. “Our main profit is what we learn from the development process.  We’re not precisely sure how SBC would react if we decided to sell our Apps. We will likely keep them free, and if we don’t we’ll make sure, in true Swattie tradition, that the profits go to a good cause,” the group responded.

Although both groups’ missions are comparable, their size is not. While Investment Club currently boasts 75 students on its mailing list and a first meeting attendance of 25, App Club has capped its membership at five to promote close cooperation between coders.

“There hasn’t been much interest from the student body. We work with some fairly obscure technologies that don’t exactly make a lot of headlines, so the population that’s actually interested is pretty small,” the club email stated.

Numbers aside, members of both clubs seem positive about the directions their organizations have taken.

While App Development Club has remained much more low-key, this seems to fit into its overall ad hoc structure and plans. In regards to its future activities, the group responded: “In the immortal words of nuclear physicist Richard Feynman, we’re making it up as we go along.”

Investment Club members have complimented the organization’s membership diversity and overall approach. “From what I’ve heard, the old club consisted mostly of Phi Psi members and was just interested in the purely money-making aspect of investing. I think the membership and areas of investment interest represented now are much more diverse,” said Parker Murray ’15.

Murray further stated that he feels the club has a lot to offer individuals who aren’t as interested in finance careers; “I personally don’t have any plans to go on Wall Street and am more interested in the club for its money management applications,” he said.

Investment Club Co-President Aliya Padamsee summed up both clubs’ modus operandi by referencing her own experience in the field of investing: “Other than seminars I’ve attended on [futures and options], I’ve learned by doing!”

Parker Murray is Director of Art at the Phoenix.  He had no role in the conception or production of this article.

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