The Associated Students Investment Advisory Committee (IAC) is an undergraduate-run investment committee funded by Associated Students dedicated to educating their fellow UCSB classmates in finance and investing through hands-on investment analysis, discussion and action.
Working with their active portfolio, students at any level of investment experience have the opportunity to become more knowledgeable in the investing and finance industry.
The Investment Advisory Committee (IAC) manages an active portfolio worth over $200,000. The best-performing stock the IAC holds is NVIDIA — a technology company that is well-known for inventing graphics processing units — with an unrealized return percentage of 37,744.43% and a realized gain percentage of 1,399.84%. The unrealized return percentage is the potential gain or loss on an investment based on current market value if sold immediately, while realized gains reflect the actual profits made based on already executed sales.
Reed Callister, a fourth-year economics major and the co-chairman of the IAC, said in an email statement to the Nexus that he initially joined IAC to gain practical investment experience and learn about diverse industry fields.
“I decided to join IAC to get hands-on investment experience, learn about interesting business models and industries, and surround myself with smart and like-minded peers,” Callister said.
According to Callister, joining IAC is generally an intensive process that involves a formal application process and multiple rounds of interviews.
“IAC holds two recruitment cycles each school year — one in the fall and one in the spring. Prospective members must fill out an online application form and then undergo two rounds of interviews carried out by executive board members,” Callister said.
The IAC is divided into nine groups: Energy and Utilities; Industrials and Commodities; Real Estate; Fixed Income; Healthcare and Life Sciences; Special Situations; Consumer Defensive/Cyclical; Financial Institutions and Technology; Media, & Telecommunications, according to Callister. Each group is led by a portfolio manager and consists of junior analysts and occasionally one senior analyst, and there are approximately 80 members in IAC.
As their names suggest, each IAC group is responsible for understanding and finding investments in different sectors of the market, with various groups finding different degrees of success. Of note is the Technology, Media, & Telecommunications group, which currently has unrealized returns of more than 320%.
Members in each sector pitch and present proposals for managing the fund once quarterly, including the buying and selling of securities, which include financial assets such as stocks, bonds and exchange traded funds. The executive board members then vote to decide whether or not the proposals are approved.
“Securities are sold when the committee determines they are no longer appropriate investments, which can include low-performing stocks as well as high-performing stocks that are priced highly in the market. The cash received in exchange for the sold securities are retained by the fund and reallocated to more attractive investments,” Callister said.
Callister said that most of the assets under management by the IAC come from reinvested earnings from previous investments, but IAC has also directly received injections of cash from Associated Students (A.S.).
“The last time IAC received funding from A.S. was in 2018, for $20k, and before that in 2012, for $8k,” Callister said.
In using these funds, Callister mentioned that IAC has adapted their investment strategy to fit the current economic landscape.
“Our investment strategy has always revolved around finding attractive, undervalued businesses that we feel offer compelling cash flow prospects,” Callister noted. “Over the years, however, as certain macroeconomic and industry-specific dynamics have evolved, we have altered our approach and focus to account for all relevant investment considerations.”
The adaptability of IAC has resulted in consistent growth of their holdings, with positive annual growth observed except for a decline between 2021 and 2022. Between Dec. 31, 2010 and May 24, 2024, IAC’s account value increased from $32,940.24 to $245,768.04.
Matthew Tekle, a fourth-year biology major who is not part of IAC, said that he sees the IAC's occasional use of student fees for investments as a justified allocation.
“Honestly, I think this is a valid use of our fees. In comparison to the other resources and departments that our fees go to, I think this is one that I find is being utilized well. And honestly, it's interesting to see,” Tekle said.
In analyzing the actual performances of IAC’s investments, Callister shed light onto the best and worst-performing holdings.
“Out of our current holdings, NVIDIA is our best performer (up 32,772% since investing) and Opendoor is our worst performer (down 92% since investing).”
IAC tends to retain its top-performing investments. However, they also occasionally elect to sell their holdings, in part or in full, and as a result have seen strong returns on some of their investments, including NVIDIA (1,399.84% realized gain) and Apple (363.83% realized gain).
“We generally decide to hold high-performing investments assuming they are appropriately priced in the market,” Callister stated. “We often decide to sell partial stakes throughout our holding periods and have done so with NVIDIA (10 shares were sold in spring of 2023).”
Some of IAC’s investments may also imply ethical considerations. IAC currently holds 33 shares of Blackstone, an investment management company that has faced controversy for its role in the California housing crisis. In a statement to the Nexus, Callister addressed these possible ethical concerns.
“All of [IAC’s] investments undergo an approval process by the A.S. Senate, and IAC will adhere to whatever investment guidelines are proposed,” Callister said. “Our investment proposals include [environmental, social and governance] analysis — but drawing the line is not always a straightforward process, and a consistent standard should be used in doing so.”
Tekle commended IAC’s stock selections, highlighting their stability and many of the companies’ positive impact on the public.
“Looking at Pfizer, CVS [and] Medtronic, they seem to be choosing, I would say, non-controversial, in a way, safe choices,” Tekle said. “These are all companies that are making a decent amount of contributions to the general public. I think Pfizer obviously being the most pertinent one with COVID and whatnot.”
Tekle was also impressed by the high return percentage of many of IAC’s stock choices.
“I am seeing a lot of good choices looking at the return percentage. I see NVIDIA, which they've gotten a ton back. So, for my basic understanding, I would say that the choices they've made have been well constructed,” Tekle said.
Callister said that IAC selects its investments by thoroughly analyzing potential businesses to find those that are undervalued, consistently profitable and well-positioned in promising industries.
“The Investment Advisory Committee performs fundamental analysis on each of its prospective investments, with the goal of finding undervalued businesses that deliver consistent and sustainable cash flows and likewise hold strong market positions in attractive industries,” Callister said.
Tekle said that he would prefer to see the IAC focus their investments more on specific sectors, such as healthcare or real estate.
“Ideally, we could maybe increase the amount of funding in healthcare in comparison to other companies or maybe even real estate … I feel like there could be a better focus on certain industries,” Tekle said.
