First-even student-led private investment fund formed by University of Texas at Austin's Graduate School of Business — MBA students to manage funds provided by outside investors, 37 of whom have invested a total of $1.6 million

Business Wire, Feb 6, 1995

AUSTIN, Texas--(BUSINESS WIRE)--Feb. 6, 1995--Reflecting its commitment to provide MBA students with a market-driven curriculum that includes hands-on experience directly applicable to their post-MBA careers, The University of Texas at Austin's Graduate School of Business today announced the formation of the first-ever private investment fund under student management with funds provided by outside investors who expect an investment return.

The fund, legally registered as The MBA Investment Fund, L.L.C., was developed by Professor George W. Gau, chairman of the UT Department of Finance, and currently has under its management $1.6 million of private-sector capital from 37 outside investors. Fifteen second-year MBA students began making equity investments with Fund resources in mid-January. A new group of 15 first-year MBA students were competitively selected today to join the Fund management team.

Robert Witt, dean of the UT Graduate School of Business and a member of the Fund's board of directors, said: "That 37 private-sector investors would entrust more than one and a half million dollars to second-year MBAs is a strong vote of confidence in the caliber of our students and the quality of our academic programs. We're delighted by the interest already shown in this program, which we've designed to hone the skills that investment professionals look for when they hire MBA graduates. I'm confident that the MBA Investment Fund will meet the expectations of everyone concerned."

The MBA Investment Fund, L.L.C. will provide Texas MBA students with experience in identifying and analyzing investment opportunities, managing investment portfolios and developing client relationships. Students competitively selected for program slots -- only 15 per academic year -- will pursue a course of study that includes the management of the Fund as part of its curriculum. Each student is assigned to a team responsible for managing one of three separate equity portfolios within the Fund, and each team will manage its stock positions under the guidance of a professional investment counselor. The students also report to an Advisory Committee comprising faculty from the UT Department of Finance and leading professionals from the investment industry.

According to Professor Gau, who is president of the Fund, "The interaction between our student managers and the Fund's investment advisors has been excellent. Our advisors have helped us create an unsurpassed learning environment that shines a special light on our investment students and faculty."

Fund assets consist of money invested by alumni and business supporters who are recognized as accredited investors under securities laws. No management fee is assessed by the Fund; however, any operating and administrative costs associated with the Fund are charged to the Fund's investors. Any net investment earnings of the Fund will be distributed to the capital accounts of the Fund's investors in proportion to their investment in the Fund.

The Fund is governed by Managers (analogous to corporate directors) including H. Scott Caven, manager of Goldman, Sachs & Co.; Dr. George W. Gau, chairman of the UT Department of Finance; James Mulva, president and chief operating officer of the Phillips Petroleum Co.; Ralph B. Thomas, senior vice president of Fayez Sarofim & Co.; and Dr. Robert E. Witt, dean of the UT Graduate School of Business. The managers are responsible for providing general oversight of the Fund, determining rules governing the Fund's investments, selecting members of the Fund's Advisory Committee and its Investment Counselors, and soliciting capital for the Fund.

UT-Austin's MBA program, one of only four top-20 MBA programs located west of the Mississippi (the other three being in California), was recently ranked No. 17 among the nation's top 20 MBA programs by Business Week magazine. As reported by Business Week, its 900 currently-enrolled MBA students are 19% international, 31% female, earn post-MBA starting salaries averaging $61,890 and receive an average of 2.58 job offers from executive recruiters.

CONTACT: Graduate School of Business

The University of Texas at Austin

George Gau, 512/471-6612

or

Kekst and Company

Roy Winnick, 212/593-2655