| | UAH students take second place in TVA Investment Challenge(2/10/2006)A student-run stock portfolio management team at The University of Alabama in Huntsville (UAH) has won $20,000 by turning in the second-best investment performance for 2005 and the third best over the past three years in the Tennessee Valley Authority's Investment Challenge Program. In 2005 the $674,000 stock portfolio managed by the students in UAH's Capital Management Group gained 16.55 percent. By comparison, the Standard & Poor's 500 Index gained 4.91 percent for the year. "Within the framework provided by the faculty, the students make all the major investment decisions," said Dr. John Burnett, an associate professor of finance and the CMG's faculty advisor during the 2005 school year. "We give them the structure, but the success belongs to the students." "I think that was the best class that I was a part of," said Bill Clark, a CMG member who graduated from UAH with a degree in finance in May 2005. He is now a senior financial sales representative for Compass Bank in Huntsville. "It was great to see my analysis and investment choices put into use with real money. That experience gave me more confidence in my abilities and knowledge. Now that I do investing as a career I get to help people every day." For 2005, UAH finished second behind the University of Tennessee at Martin. The student investment team at the University of Kentucky was third. For the period from 2003 through 2005, Murray State University of Kentucky was first, followed by Lipscomb University and UAH. Over those years the UAH portfolio grew at an annualized 22.33 percent, compared to the S&P 500's average annual growth rate of 14.39. The UAH group's portfolio has outperformed the S&P 500 Index for three straight years, and four of the past five years. "Over the last few years we have defined and refined an objective and disciplined methodology for building a portfolio," Burnett said. CMG students take an undergraduate CMG class during the spring semester. "By the end of the semester they have developed a great appreciation for how a portfolio is constructed and managed. They also have an appreciation for how difficult it can be." Through TVA's Investment Challenge, students at 25 colleges and universities in the TVA service area manage stock portfolios that are each worth about $500,000, a small portion of the agency's Nuclear Decommissioning Trust Fund. The 25 schools participating in the investment challenge include Vanderbilt University, the University of Tennessee at Knoxville, Mississippi State, Ole Miss, the University of Kentucky and Memphis University. The Alabama schools participating are UAH, Alabama A&M University and the University of North Alabama. The TVA board created the Investment Challenge Program (ICP) in 1998 to diversify the management of its Nuclear Decommissioning Trust Fund and to give Tennessee Valley students experience in managing a stock portfolio. The program was so successful that the agency increased its initial investment of $100,000 in each portfolio by an additional $300,000. "In 2005 the program returned 6.5 percent versus 4.9 percent for the S&P 500," said Eric Davis, the ICP director and a senior financial analyst for TVA. "UAH had an excellent return for last year and was a positive contributor to the program's success. I commend Dr. Burnett and his students for their hard work." For more information: Phil Gentry, (256)824-6420 |
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