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Equitable life for pupils

One school's unit trust fund transforms the money-shy, says Elaine Williams

Teachers are used to dipping into their pockets and rummaging for cash for pupils' charity events. But being asked to write a cheque for Pounds 25 would be enough to stop most in their tracks. Yet, teachers at Sunderland High, an independent day school of about 500 pupils, have been made to see the benefits of doing just that. For they can buy a unit trust in an equities fund which is managed - very successfully - by their sixth-formers.

Judging by the fund's record so far, such investments look set to pay impressive dividends. For seven weeks out of the past eight, the fund has outperformed the Footsie and it has risen by about 10 per cent over the past three months - far ahead of a savings account which might yield about 3 per cent per annum, .

About 30 people, mostly teachers, parents and governors, have units in Sunderland High's Fiderium Trust and some have more than one. "We had grandparents recently buy two units as an investment for their newly-born grandson," said Peter Hogan, the school's deputy head who teaches economics and business studies. "The head has invested Pounds 100. At first, people were reluctant to hand over this amount of money to pupils; they were anxious about children being entrusted with real money. Now they can see how shrewdly their savings are being invested."

Mr Hogan, who helped to design the ProShare National Investment Programme, a competition for schools involving notional investments, believed pupils and staff would take the shares business seriously if they dealt in real money. "We use the legal framework of an investment club, but with a managed fund everyone can buy units,'' said Mr Hogan. "It can roll on year on year and become part of the fabric of the school. All that changes is the fund managers."

To help explain the scheme, Mr Hogan wrote an A-Z guide for a schools-managed fund setting out the legal documentation that heads and governors require, and showing how to choose the trust-ees and how to select and train the fund managers. The guide also covers use of stockbrokers.

In essence, the sixth-formers are running a financial services business. And this year they have added to it by using the Pounds 960 won through the Sunderland Youth Enterprise Award to buy Infotrade software, a package that gives online shares information.

The children produce a newsletter about the fund, and during last summer's speech day ran a trade stand. They have also written a prospectus in which they set out their ethical parameters: they do not buy shares in companies that exploit child labour, and they favour those that are environmentally friendly. At this year's AGM they must decide whether or not to pay out a dividend.

At present, the Fiderium Trust has Pounds 3,000 invested in the stock market, with shares in Tesco, British Telecom, and Cowie, a local fleet-hire company. And when Sunderland Football Club was floated before Christmas the trust made a last-minute decision to invest there, too.

Mr Hogan said: "Half the managers supported Sunderland, half Newcastle. In the end we got to the Royal Bank of Scotland on Christmas Eve just before the midday closing deadline with Pounds 585 in cash to buy shares at Pounds 5.80 each."

When the Newcastle flotation became news the school sold its Sunderland shares for Pounds 730 and fund managers must now decide whether or not to invest in Newcastle. "It's amazing how conservative and responsible children are when dealing with other people's money," said Mr Hogan, "They want to do a good job, and they do read the Financial Times and the Investors Chronicle very day.

"Staff find it quite difficult to believe their pupils are achieving all this. I think most teachers are frightened of the stock market, but with these units they can develop an interest in it without feeling they've risked too much. "

Mr Hogan began discussing the idea of setting up a trust about a year ago, and it was formally launched with eight fund managers last autumn. The managers will be appointed annually from pupils entering the lower sixth, all of whom must undergo a rigorous selection process. They are asked to produce a report setting out how they would develop the fund and they are given a notional amount of money to invest. They are also interviewed by a stockbroker and agree to a 10-point contract on issues of honesty, confidentiality, integrity and reliability. "Fund managers are very jealous about their role," said Mr Hogan. "I don't think we'll have a shortage of candidates in the future."

Copies of the managed fund manual can be obtained from Peter Hogan, Sunderland High School, Mowbray Rd, Sunderland SR2 8HY. Tel: 0191 567 4984


Unit trusts were established in 1931 to enable small investors to spread their risks on the stock market. An Act of 1939 stipulated that a board of independent trustees should supervise fund managers and also agree a method of valuation. The trusts became popular after 1958 when Edward du Cann MP promoted a change in rules that allowed individual funds to grow in line with demand. The value of unit trust funds has almost trebled to Pounds 140 billion in the past five years. The growth in Personal Equity Plans, with their tax incentives, has contributed to this rise. The unit trust starter pack is available free from the Unit Trust Association Tel. 0171-735 5595.

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