CREATING A NEW TYPE OF STUDENT MANAGED FUND USING PEER-TO-PEER LOANS

Finance students can experience real-world challenges and enhance their learning by running an investment fund. However, most of the student-managed funds that currently exist are relatively large, equity-focused portfolios; few funds concentrate on debt, since fixed-income investing usually requires larger investments and higher expenses. In this paper, we present a new type of fixed-income fund: a peer-to-peer lending portfolio, run through the Prosper Marketplace electronic platform. Such portfolios can be hundreds of times smaller than even the smallest traditional student-managed funds. Using Prosper, business programs of almost any size can offer students the educational experience of running an investment fund.