Wednesday, May 4, 2011

Many Favorable Comments Received Following the AIM Fixed Income Fund Presentation

Kyle Boser and Mark Rutherford

Since January 2005, the students in the AIM program have been managing a portion of Marquette University's endowment funds. Each year the student-managers prepare a formal AIM Fund Annual Report that is presented to a group of professionals, alumni, faculty, and administrators at the end of the spring semester.

The students in the AIM Class of 2011 presented the performance results of the AIM Fixed Income Fund to six guests earlier today. The AIM Equity and International Equity Funds will be presented on Friday in the AIM Room at 11 am.

Attending the presentation today was:
  • Sean Gissal, Chief Investment Officer, Marquette University
  • Megan Zhou, Endowment Investment Analyst, Marquette University
  • Dan Tranchita, Baird Advisors
  • Jay Schwister, Baird Advisors
  • Pat Brown, Citigroup
  • Tim Fotsch, Wells Capital Management
The presentation was well received and the investment professionals offered their candid observations and suggestions. One of the most important contributions of the guests included their recommendation that future AIM student-managers conduct pro forma evaluations of the inherent risks contained within the fixed income fund (i.e. tracking error, duration risk, credit risk, and yield curve risk). "The 'stress testing' of the fund to different scenarios will allow the students to understand the potential upside and downside exposure the portfolio would experience," Jay Schwister said. "You want to know what impact a change of + or - 50 bps will have on your fund."

Sean Gissal, Marquette's CIO
The investment professionals also told the students to consider the importance of taking a longer term view of the portfolio and to be certain that the strategies matched the holding period assumptions. Sean Gissal added, "We want to know that your strategy is being implemented in a consistent manner." Overall, the guests were highly complementary of the students' presentations and write-ups.

The students and investment professionals engaged in some lively conversations about the level of macro-economic activity and the degree of inflation risk that the U.S. economy faces. In addition, the discussion focused on the underlying trends in emerging markets, the U.S. government deficit, monetary policy, and the status of the European debt situation. The investment professionals were impressed with the process the students used to arrive at a group decision. Dan Tranchita said, "The sophistication of the AIM students regarding the management of the fixed income funds has increased significantly over the years. I always enjoy these end of the semester meetings with the students."   

Dan Tranchita and Jay Schwister
Dr. David Krause, AIM program director, said, "It was interesting to observe the conversation between the students and the guests. I was pleased that the students were able to engage in a high level dialogue with the investment professionals."

Krause continued, "We had  a lot of fixed income investment firepower in the AIM Room today and it was good seeing our students interacting with the investment professionals. The students in the Class of 2011 have made great progress during the past year and I'm proud of their accomplishments. They have continued the traditional of producing positive alpha in the AIM Fixed Income Fund. The Class of 2012 has some large shoes to fill."

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