Virginia Tech students invest $500,000 in farm commodities

Virginia Tech students are getting hands-on experience in risk and financial management by investing $500,000 in agricultural commodities that could yield high returns for the university’s foundation.

The Department of Agricultural and Applied Economics in the College of Agricultural and Life Sciences, with the help from an endowment from the Virginia Tech Foundation, has created the Commodity Invested by Students, or COINS fund.

Students of agricultural and applied economics, along with finance majors, run the fund with guidance from faculty advisers. Each of a dozen students is responsible for researching and monitoring the market for a commodity such as corn, soybeans or livestock.

“The student-run fund provides hands-on opportunities for students to perform supply and demand analysis of agricultural commodities while also learning how to create, monitor and adjust an investment portfolio,” said Dr. Hyrum Smith, an assistant professor of agricultural and applied economics. “As far as I am aware, this is the only student-run agricultural commodities fund in the nation.”

The potential returns from the investments go to the foundation, and COINS receives about .5 percent to cover operational expenses.

“No well-rounded education is complete without real-world exposure,” said Jonah Bowles, senior agricultural market analyst for Virginia Farm Bureau Federation. Bowles was asked by Dr. Jason Grant, an assistant professor of agricultural and applied economics, to provide oversight to the COINS program.

“Virginia Tech has taken a bold step to allow students the opportunity to make decisions and then experience the impact of those decisions,” he said.

Students dedicate as much as 20 hours a week to the program and set portfolio goals, keep records and report on commodity performance. Recommended trades must be approved by a majority vote before they are passed along to advisers who place trades with a broker. The students are investing in exchange-traded funds, which are similar to mutual funds.

Grant said the students’ investments have the potential to bring in higher returns over time, because growing populations in Brazil, China, India and Russia recently have propelled the agricultural commodity market into a bullish rally.