Not many MBA courses come with the responsibility of managing nearly $3 million in assets. But students in Robert Korajczyk's Asset Management Practicum have thrived with that assignment.
Students in the Kellogg School of Management's four-quarter experiential course manage approximately $2.7 million from the school's endowment. The current group of more than 30 students took over in the spring and, despite market troubles, outperformed the benchmark Standard & Poor's 500 Index by as much as 2 percent through mid-September.
The returns slipped during the credit crisis in the fall, but it's all part of the learning experience. "When the market is generally going up, everyone looks like a genius, and more importantly everyone thinks they're a genius," said Korajczyk, the Harry G. Guthmann Professor of Finance and director of the Kellogg School's Zell Center for Risk Research. "This is a more difficult market, and it's one where students get an appreciation for the importance of careful analysis and an understanding of the risks they're taking. It's a great market to learn in."
During the course, investment and discussion of strategies happen side by side.
"The academic sequence provides us with a great opportunity to learn finance and portfolio management theory and apply this knowledge directly to the funds we manage," said Michael Tyree, a second-year Kellogg School student who placed second along with two classmates at the 2007 MBA Stock Pitch Challenge. "The practicum also provides us with a highly interactive forum in which we can learn from each other and ultimately become better investors."
Korajczyk created the course in spring 2007 with $350,000 from an investment club that was started with a donation from the Crown family in the mid-1960s. Alumni contributions, from $200 to $1.5 million, have given the class its working capital.
In addition to the practical experience, the courses also include investment theory and exposure to alumni who present their experiences in the industry.
— Geoffrey Cubbage