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At Haas, Big Returns On SR Investing

Haas Center for Responsible Business Executive Director Jo Mackness

Haas Center for Responsible Business Executive Director Jo Mackness

Dale Stephens, author of “Hacking Your Education,” posed the following hypothetical scenario recently in The Wall Street Journal: Would you hire “the candidate who built a profitable business over the course of two years, or the candidate who sat in lectures and reviewed case studies to get a degree?”

It’s not the first time that the practical value of an MBA has come under fire and it won’t be the last. But MBA students at UC-Berkeley’s Haas School, among others, are demonstrating that classes and real-world experience aren’t always mutually exclusive.

One great example: the Haas Socially Responsible Investment Fund (HSRIF) where Berkeley MBA candidates get the chance to receive class credit for managing a real-world portfolio of about 20 different companies. There are any number of other business schools where students manage real money, but at Haas all the investing is in socially responsible business.

“No other fund out there is student-managed, focused on socially responsible investing, and this big,” said Jo Mackness, executive director of the Haas Center for Responsible Business (CRB).

The Fund came about right before the 2008 financial crisis. Fortunately for the initial principals, they only began investing after the crisis hit.

HAAS AIMS TO GROW INVESTMENT FUND TO $15 MILLION

Since then, HSRIF has maintained a return of nearly 50 percent—all while facing 100 percent turnover every 18 months. What’s more, the Fund is on the verge of getting much bigger: On March 20, the Haas Center for Responsible Business announced a long-term goal of increasing the Fund’s capital from $1.7 million to $15 million, a size that would allow it to cover the CRB’s annual operating budget. For the first time in five years, Mackness is tasked with growing the Fund by seeking contributions from Haas alumni and companies with similar values.

HSRIF aims to connect the practical with the pedagogical. “One of the central teachings of the liberal arts is that values matter,” Investment Advisory Committee member Lloyd Kurtz said. “Presumably, they should matter in business because you spend so much of your life working.”

The idea is that the Fund’s growth will model alternative means of generating income for nonprofits (like the CRB) and spark discussion in the investment community. “We’re trying to broaden our educational reach,” Mackness said.

Though its goals today are far-reaching, HSRIF started as a club; once the amount of work it entailed became apparent, it turned into a full-fledged class. Now, principals meet for two hours every week, participate in day-long workshops twice a semester and attend a two-hour call with the Investment Advisory Committee every three months.

Principals also put in many hours outside the class itself—anywhere from two to 10 per week, according to 2012-2013 principal Paul Maa. Still, the extra work doesn’t resemble conventional studying. “Most classes have set things we have to learn, but in this class we are given the flexibility to specifically choose what we want to learn,” Maa said.

‘WE ARE NOT HERE TO SPOON-FEED THEM’

“I see my job as being a resource to them,” Kurtz said. “It’s important that the students have autonomy. We’re not here to spoon-feed them.” As a senior portfolio manager at Nelson Capital, Kurtz is not at liberty to give direct investment advice. Rather, he introduces students to research that might inform their decisions: Kurtz teaches Social Investing, a class all principals are required to take.