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University Relations

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Nov. 29, 2005
Contact: Catherine Shenoy, director of business, 864-7519.

KU class' real-life stock market fund flirts with $1 million mark

LAWRENCE -- If $230,000 can be considered a humble beginning, the Applied Portfolio Management (APM) class at the University of Kansas has come a long way.

The class began after KU alumnus Kent McCarthy made the $200,000 plus donation in 1993 to provide students an opportunity to make real investments in the stock market. Now, despite the volatile nature of the market, the fund is flirting with the $1 million mark.

" It was a big deal for me," said Catherine Shenoy, assistant professor and director of Applied Portfolio Management who leads the class, of topping the million-dollar mark. "I wanted to call someone and say, 'Guess what we did!' I know some of the alums were excited, too, because they sent e-mails congratulating us."

The fund surpassed the magical million-dollar mark in August but has since dipped back below. A few under-performing stocks are partly to blame, but the decrease is also due to a contribution from the fund to the KU community. Each year, the fund makes a donation to a basketball scholarship. This year's award was worth about $16,000, Shenoy said.

The APM class allows students to trade real stock using real money, giving them practical investment experience. The students are expected to make stock recommendations only after digging deeply into the fundamentals of companies. This preparation teaches them how to make buying and selling decisions based on research.

The portfolio's gain is actually more impressive than it appears. Near the end of 2002, it was down to nearly $200,000. In less than three years the portfolio jumped by about $800,000 -- representing an increase of nearly 400 percent during that period.

The surge has continued this year, the portfolio has gained 8.5 percent since January.

McCarthy, who gave the grant and founded the class, is no longer the lead instructor, but Shenoy said he still keeps in regular contact. The former Goldman Sachs associate who managed about $1 billion in investment funds has also helped the class learn about international investing, thanks to his business contacts in China. Shenoy said about 15 percent of the fund is invested in Chinese equities, while about 25 percent of the total fund is invested internationally.

The class has also been credited with bringing KU students to the attention of Wall Street recruiters. High rollers in the nation's financial capital now know KU students have been armed with real-life experience before graduation.

The market may dish out its share of bad days, but students in the APM class come out well-prepared for investing in the real world.

" Nothing is ever certain with the market, but we always expect to do well," Shenoy said. "I always hope for the best and expect the worst."

The strategy seems to be working.

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The University of Kansas is a major comprehensive research and teaching university. University Relations is the central public relations office for KU's Lawrence campus.

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