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Tapping Into the Future of Finance

Rachel Carr and Rachel Iwanicki, both MSF '17, in front of the FERC

The colorful, 78-foot long electronic stock ticker on the third floor of the McCombs School of Business visibly links the Financial Education and Research Center and the larger world of finance.

The research center houses classes, contains a student-run investment fund, and offers presentations and workshops. Students working here get plenty of hands-on opportunities to develop the skills necessary for careers in finance.

Envisioning the Future

The EDS Financial Trading and Technology Center first opened in 1996. Then Finance Department Chairman George W. Gau envisioned a state-of-the-art trading, research, and teaching facility where students from The University of Texas at Austin’s business school could gain experience accessing the growing flow of financial data and study its impact on markets. 

With over $6 million provided by sponsors, the center's MBA fund trading room and conference room were modeled after the Houston office of global investment firm AIM Investments, the first of its kind at a university. It became a model for similar facilities at schools both in the U.S. and abroad. 

"For years after its creation, we would have people coming in from universities around the country and the world wanting a tour of the facility to see how it was set up," says assistant director Derek Fisher

The center primarily creates a controlled environment for MBA students to practice investing in the stock market through a trading room containing six stations. The classroom and lab offers 50 workstations, along with audio visual capabilities for presentations and teaching, lecture capture, and video conferencing.

Student-Managed Investment Fund

In 1994, Gau and his team established the MBA Investment Fund, the first legally constituted, private investment fund managed by students. It was created to enable MBA students at McCombs to obtain experience in managing investment portfolios and developing relationships with clients.

Students apply for this special opportunity each year, with only 15 to 20 gaining admission from over 100 applicants. Accepted students work as fund managers overseeing stocks with supervision from a faculty advisor. Currently, the fund totals approximately $28 million.

Finance Lecturer Greg Alves, who was recently named director of the MBA Investment Fund, says there have been cycles where people claim active management is dead.

"What we hope to do is provide our students with an education that has depth and breadth," says Alves. "Then they can conduct their own analysis, make active investment decisions in a real-world setting, and come to their own conclusions — both in terms of their career and their efforts for investment management."

That experience has served McCombs students well. "The Investment Fund was a critical program that enabled me to work in asset management," says Flavia de la Fuente, MBA '15, an investments analyst with the Employment Retirement System of Texas. "Without the hands-on experience of working in capital markets and trading public equity, I wouldn't be the investor I am today."

Revamping the Center

In 2002, the center underwent a remodel and in 2012 the original stock ticker (which had started having technical problems) was replaced. In 2016, the space was renamed to emphasize the increasing focus on research.

The center is now primarily used as a finance classroom and a lab where students can experience the latest database and analytic software like Bloomberg Terminals, FactSet, and Morningstar to do homework, study, or research the latest financial and investing trends.

Xiang Kang, Ph.D. candidate in finance, at work in the FERC

McCombs faculty and students who use the center have access to real-time data feeds from leading providers of financial information. That information is used by students in a wide variety of finance courses ranging from portfolio management to applications of information technology. 

"The University of Texas is unique in that the tools that we provide our students are absolutely excellent," says Alves, the MBA Investment Fund's director. "This is a professional money management shop, essentially."

At both the MBA and undergraduate level, the center also serves as a laboratory for the creation of innovative teaching techniques. 

"Our students get to experience today's Wall Street technology to prepare them to be tomorrow's leaders," says Fisher.

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