As part of their Finance 4201 class, some College of Business seniors will help allocate over $68,000 in the Truman Tracy fund. This money, donated almost 40 years ago, is proving to be a valuable learning tool for students at MU.
“[The fund] provided a forum for me to learn and do research as well as make an actionable decision,” said Brett Giangiacomo, a former Finance 4201 student.
The Truman Tracy fund was established in 1967 in the name of an esteemed professor that taught business at MU during the 1960’s. It gives students the opportunity to gain portfolio experience through active management of stocks. The funds objective states that its goal is “to achieve above average returns through critical analysis of industry potential based on the current business cycle.” Furthermore, the objective says that this goal is to be achieved by student managers.
The students in Finance 4201 have control over where the money in the fund will be invested. After the mid-semester presentations by all the groups in the class, all of the money is divided between the groups. The amount received by each is based on their analysis. Once the money is allotted to the groups, each one can decide where to invest their money and can move it around as they wish until the end of the semester.
This chart shows the value of a dollar in the Truman Tracy Fund compared to that of one in the S&P 500 from 2001 through 2004.
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This plan has worked very well, especially in the past few years. In 2004, the fund achieved a 15.52 percent return, outperforming the S&P 500, which had a return of 10.88 percent. Fund Advisor Cyndi McDonald attributes this to the hard work of the students.
“The students are very capable of managing the fund,” said Dr. McDonald. “Once the money is allocated, I allow the groups to move the money at their discretion…I just call the broker and tell him exactly what the students told me….The students do a great job. The fund has seen returns higher than the S&P 500 for the past 4 years.”
Currently, the fund is distributed between numerous industries ranging from health care to consumer staples to energy. Its allocation will change in March when this semester’s students receive control of the investment monies in hopes to continue increasing the fund from the $68,000 at which it currently stands.
Despite this large amount of money in the fund, many universities of comparable size to MU have much larger student invested funds. UCLA Anderson School of Management has $2 million in its fund, while Oklahoma’s Price College of Business has over $350,000. At MichiganState, the Eli Broad College of Business has approximately $1 million in its fund, and there is $500,000 invest at NorthernArizonaUniversity.
Despite the smaller size of MU’s student investment fund, its success has not gone unnoticed. Redefining Investment Strategy Education (RISE) is a global student investment strategy symposium that some of the students working with the Truman Tracy Fun have attended the past few years. They were finalists for each of the past three years, receiving awards in 2002 and 2003. Students returned to the event in March, but did not receive any awards for their efforts during this past year.
With the opportunities that it brings, it is clear that this fund is making a difference in the education of many of MU’s finance students.
Giangiacomo thought the class was a good learning experience. “I think this was a positive experience,” he said. “Working with the fund forces students to analyze how they make decisions. One has to develop strong reasons for why they chose a specific investment strategy as well as whey they did not choose others. If you cannot answer both of those questions, you have not thought about the whole problem and need to do more work.”