As high school students select topics for the annual Intel (INTC) Science Talent Search, they typically gravitate toward math, biochemistry, and medicine. Chad Sandler chose mutual-fund managers.
Sandler, 17, a senior at North Shore Hebrew Academy High School in Great Neck, N.Y., wanted to develop a profile of an ideal fund manager. He focused on demographic data, including where fund managers lived, what schools they attended, and what academic degrees they held. His project, "The Highways and Byways of Fund Management: Selected Demographic Characteristics as Predictors of Mutual Fund Success," was a semifinalist among 120,000 submissions for the 2006 Intel competition.
Based on previous academic research, Sandler thought managers who graduated from top-tier universities and held MBAs would outperform their peers, and they did. But he also discovered some surprises. First, fund managers based in mountain time zone areas had better track records than those located in U.S. commercial centers. While a top-notch academic background is useful at the start of a career, after six years in the business, managers from second-tier universities matched the performance of tier-one graduates. "New managers remain with the herd until they are more confident and established in their position," Sandler says.
Such findings are more useful to the average person than those of the typical Intel project. (A finalist for the 2006 Intel contest included "Foraging Behavior and Food Preferences of Argentine Ants.") "Because more people are invested in mutual funds today, including so many baby boomers, [the fund project] has a social significance," says J. Harris Nierman, director of social sciences at North Shore Hebrew Academy and one of Sandler's advisers.
What motivates a high school student and fan of The Simpsons to study mutual funds? "I've always been interested in economics and investments," says Sandler, who regularly reads financial publications and watches CNBC (GE). In ninth grade, Sandler placed seventh among New Yorkers in the Stock Market Game, a program sponsored by the major exchanges that lets students manage a simulated portfolio.
For the Intel project, Sandler spent two years crunching data from 151 funds. He also combed the Morningstar (MORN) fund database and reviewed research from behavioral finance economists.
Sandler may bolster his own portfolio with his $1,000 Intel prize. If he follows his study, funds from Denver-based Janus (JNS) or Salt Lake City's Wasatch Advisors are likely recipients.
By Lauren Young