CONTACT: GEORGE MCCRORY
100 Old Public Library
Iowa City IA 52242
(319) 384-0012; fax (319) 384-0024
Release: Feb. 6, 2001
UI student stock portfolios post excellent returns
IOWA CITY, Iowa -- Stock portfolios managed by University of Iowa finance
students have once again beaten their market benchmark (the S&P 500 Index)
for calendar year 2000.
The Henry Fund, the MBA student portfolio, gained 7.17 percent over 2000,
outperforming the S&P 500, which was down 9.10 percent. The Krause Fund,
managed by undergraduate students in the Henry B. Tippie College of Business,
was down 6.79 percent for 2000, but still beat the S&P 500.
The Henry Fund has outperformed the S&P 500 in six of the seven years
since its inception in May 1994, while the Krause Fund has beaten the S&P
500 both years since December 1998.
The top performers in the Henry Fund portfolio included Frontier Airlines
with a 172 percent return and Philip Morris Companies with a 91.3 percent
return. Eleven MBA students manage the fund composed of 27 stocks in ten sectors.
The portfolio management experience helps students sell themselves in the
competitive finance job market, allowing them to give concrete examples of
their analysis during job interviews, said Todd Houge, a UI assistant professor
of finance who oversees the student portfolios. Students perform an in-depth
fundamental valuation of each company.
"These classes provide students an analytical framework for determining
the core value drivers of a company," said Houge. "We do not claim
to have all of the answers; rather, we want students to leave with an understanding
of how financial markets work and the difficulty of identifying undervalued
firms. However, the track record of the Henry and Krause Funds suggests that
we are on the right track."
The Henry Fund (http://www.biz.uiowa.edu/henry)
is named after alumni benefactors Henry B. Tippie and Henry Royer. Investing
the funds held in the UI Foundation endowment, the MBA students present their
stock recommendations to a board of investment professionals.
In the Krause Fund (http://www.biz.uiowa.edu/krause),
the portfolio's top stocks included Enron, which posted an 87.3 percent return,
and Merrill Lynch, which returned 63.7 percent. A total of 60 undergraduate
students from a security analysis class manage the 12-stock Krause Fund portfolio.
At least 25 percent of the funds assets are invested in firms with a
significant presence in the state of Iowa.
Endowed by W.A. "Bill" Krause, president and chief executive officer
of the Krause Gentle Corp., the $140,000 Krause Fund provides undergraduate
UI students real-world portfolio management experience. The 1957 graduate
of the UI also established similar funds in 1998 at Iowa State University,
the University of Northern Iowa and Drake University. Undergraduates at the
four universities compete in the annual Krause Challenge, to show the best
return on their investments. One student from each of the four universities
serves on the board of directors of the Krause Gentle Corp. and presents the
portfolio for board approval each year.
For more information about the UI student-managed funds, contact Houge at