After gaining only about 1 percent in its first year of operation, the Carlson School of Management’s Golden Gopher Growth Fund hasn’t exactly enjoyed the same 20 percent gains as the Dow or the 40 percent gains of the technology-fueled NASDAQ composite.
Ironically, the business school is comfortable with this; negative numbers are acceptable given the fund’s success in providing a handful of MBA candidates with a rare, and very marketable, learning experience.
Since its inception last May with a $1 million investment by Norwest Bank, the student-run mutual fund has attracted a total of $2.5 million in cash. USBank invested $1 million last summer and several partners with Alliance Capital Management recently put up $500,000.
By most accounts, the fund, one of a handful in the United States, has met expectations. Even its loss is acceptable. The type of stocks in the Golden Gopher Growth Fund — those issued by small, fledgling companies — have performed dismally, suffering average losses of about 10 percent in all of last year. The fund’s performance is more impressive given the stipulation that its managers could choose from only Minnesota companies, greatly narrowing investment possibilities.
But where the fund clearly came out in positive territory was in bringing the business community into closer contact with the Carlson school, a relationship long-recognized as one of the school’s weak spots.
The fund is designed so that Twin Cities professionals are constantly involved with the students and their investment decisions. Each of the 20 student fund managers are assigned a mentor from whom crucial analyst research and company reports can be gathered. Then, when decisions need to be made on divesting or adding a stock to the fund portfolio, the students must again go to local experts and present their conclusions and arguments before a panel.
Beth Sauve, an MBA candidate in finance and accounting, said she and the other students felt some trepidation about asking too much of their mentors. She said their initial idea was “don’t bother these people too much — they have jobs downtown.” But they actually asked to see more of the students, she said.
To bring Golden Gopher Growth Fund participants into still closer contact with business professionals, the program is gearing up for a number of changes set to take effect in June.
“We’re still not using all the richness of the educational experience that we can,” said Finance Department Chairman Tim Nantell. While he conceded that the program has increasingly engaged students with the community, he added that despite its progress, “there are a lot of resources in town to use, and we just haven’t been able to make this happen yet or get that person involved. There’s just a huge amount of stuff that needs to get done.”
Hopefully, one year will be enough time to do it all. That’s the amount of time the new group of students will work on the fund, instead of the usual nine to 10 weeks.
Along with the time commitment, the student fund managers’ responsibilities will grow from analyzing and recommending stocks to including the fund’s accounting duties and investor relations. To attract more investors and more MBA students, marketing will also be added to the work load.
A growth fund Web site and a renovated finance lab with walk-up stock quotes, an electronic ticker tape display, and televisions broadcasting the latest market news, will help make the program more public.
A broadening of the program is being urged in part because pension or mutual fund manager positions, typically the ideal career for graduates of an MBA in finance, require more than just the ability to choose stocks and weigh analyst reports.
“If you want to be in this business, you have to realize that there’s an investor relations side and an accounting side,” Sauve said. “There’s a sell to it.”