CFA Levels 1 and 2 Results Are Out Today --- Good Luck!

The June 2011 CFA Level I and 2 results have been sent to the candidates as of this morning..... best of luck to everyone who took the exam.

The CFA servers are busy so the June 2011 Level I and I overall exam results will not be available until 9:00 a.m. ET on 27 July.

Marquette University Endowment Scouts Equity Managers

From the latest Hedge Fund Alert: “Marquette University Endowment, which already invests more than 25% of its capital in hedge funds, has begun a man­ager search that could lead to another $16 million of commit­ments.

Chief investment officer Sean Gissal is mainly focused on equity managers at this point, and to that end has assembled a list of 20-30 hedge fund firms that fit the bill. But he hasn’t shut the door to additional candidates. Managers can either contact Gissal directly or go through the endowment’s general consul­tant, Prime Buchholz of Portsmouth, N.H.

The $400 million endowment completed an asset-allocation study last year that effectively boosted its hedge fund allocation to as much as 30% of overall assets. The endowment currently invests 15% of its capital in two funds of funds run by Barlow Partners and Common Sense Investment, both of New York. An­other 11% is invested with two single-manager vehicles.

Gissal and his staff have spent the past 12 months or so whittling down the list of equity managers based on input from investment professionals at other institutions and their own preliminary due diligence. Milwaukee-based Marquette Uni­versity Endowment has been investing in hedge funds since 2004.”

Which is better, a CFA charter or an MBA?

Jennifer Swartz-Turfle posts in The Finance Professionals’ Post, a publication of the New York Society of Security Analysts an interesting article about the question: what’s better, a CFA charter or an MBA? This well-written article addresses the issue and offers some very interesting points.

[Dr. David Krause, AIM program director said, “I’m going to keep this article handy since I’m often asked the question by students and alumni. Basing this only on instinct and personal observation (and not on research), I believe that the ROI of a CFA charter trumps an MBA. However, I am biased towards the money management world and believe that an MBA might be better suited if you plan to run GE or Microsoft someday. The following article by Jennifer Swartz-Turfle will help those struggling with the question of CFA or MBA.” Note: Marquette University's AIM program is the first undergraduate institution to become a CFA Program Partner.]

The article can be accessed at http://tinyurl.com/42efas8: “If you’ve ever visited finance or analyst forums, you will probably immediately recognize the debate: which is better, the Chartered Financial Analyst (CFA) designation or a Master’s in Business Administration (MBA)? Some argue the MBA is a waste of time and money unless it comes from one of the top-ranked MBA programs. Others claim MBA graduates have a flimsy grasp on finance compared with those with a CFA charter. MBA enthusiasts counter that CFAs have a deep knowledge of asset management principles but lack context about the broader aspects of business. Underlying these arguments is the answer: no one program is right for everyone.

Even the CFA Institute does not discount the value of an MBA. According to an article on eFinancialCareers.com, Bob Johnson, managing director of the CFAI’s education division, says the MBA and CFA are ‘complimentary’ designations. ‘For a young person who is preparing for a career in investment management, both educational opportunities are something they should consider.’ Furthermore, a recent study of portfolio managers, found no discernable difference in portfolio performance between CFA charterholders and MBAs.

So, should you start preparing for the CFA Level I exam or download a practice test for the GMAT? Analyst Forum, an online community focused exclusively on preparation for the various financial analyst examinations, has explored this question in depth, including (naturally!) a spreadsheet to compute the net present value (NPV) of both the CFA program and MBA programs. Although the CFA comes out ahead in this analysis with a NPV of $204,394 compared with $177,884 for the MBA, the author notes that ‘a change in assumptions can change the answer.’ Since the right program for you depends largely on your resources, your skill set, and what you ultimately want to do, the following are key considerations when making your decision:

Your resources and future earning potential. The difference between the financial investment in an MBA and the CFA Program is stark: most top full-time MBA programs cost more than $45,000 for a single year of a two-year program. The CFA Program, all-included, costs just a fraction of that at under $4,500 (more if you don’t pass exams on the first try). The time commitment for the CFA, however, is significant, as the average time to earn a charter is four years. Those already employed might consider part-time programs, as many employers will pick up the tab for the CFA Program or an executive MBA program.

In addition, while a CFA charter holds the same value for all who earn it, not all MBAs are created equal. And while the reputation of the MBA program matters to many employers, a US News article also stresses the importance of a program’s job placement rates after graduation. Should you decide an MBA is right for you, the following criteria, used by the Economist in its yearly program rankings, are important to consider:

• Opening of new career opportunities and/or furthering of current career;
• Personal development and educational experience;
• Increase in salary; and
• Potential to network.

Your commitment to finance. While the CFA designation has reached the status of ‘gold standard’ in the industry for asset management, the curriculum primarily teaches the technical skills required for investment management. An MBA, on the other hand, provides exposure across a broader field of study. If you’ve decided asset management is the thing for you, the CFA Program is a better investment. But if you’re still uncertain about a career in finance, an MBA might be a better long-term bet.

Your learning style. Because the CFA is a self-study program, candidates can move along at their own pace. For the self-directed, this may be an advantage. However, some learners may benefit from, or even require, the structure of classes, discussion, and ongoing evaluation that a master’s program provides.

A final thought to keep in mind: your credentials don’t make your career. Most firms choose candidates with relevant job experience in addition to their education. Whatever program you decide will work for you, it’s not just the initials after your name—but what you do with them—that really count.”

AIM Fund Performance as of June 30, 2011

AIM Equity Fund Posts Solid June and 2011 YTD Returns

The AIM Equity Fund (which is benchmarked to the Russell 2000 Index) has posted an 11.85% return since the beginning of the year compared to a 6.21% return for the benchmark. The AIM Equity Fund has posted a 4.08% annualized return since inception versus 5.18% for the Russell 2000 Index. The non-risk-adjusted performance is displayed below:

	AIM Equity Fund	Benchmark: Russell 2000
Jun-11	-0.70	-2.31
Q2 2011	1.79	-1.61
YTD 2011	11.85	6.21
1 Year	37.01	37.41
3 Years	6.12	7.77
5 Years	2.29	4.08
Since inception (Oct 2005)	4.08	5.18

AIM International Equity Fund 2011 YTD Returns

The AIM International Equity Fund (which is benchmarked to the S&P ADR Index) has posted a 2.15% return since the beginning of the year compared to a 4.43% return for the benchmark. The AIM International Equity Fund has posted a 8.97% annualized return since inception versus 6.15% for the S&P ADR Index. The non-risk-adjusted performance is displayed below:

	AIM Intl Equity Fund	Benchmark: S&P ADR
Jun-11	-1.88	-1.54
Q2 2011	-1.06	-0.31
YTD 2011	2.15	4.43
1 Year	29.37	31.15
2 Years	21.23	18.04
Since inception (Oct 2008)	8.97	6.15

AIM Fixed Income Fund 2011 YTD Returns

The AIM Fixed Income Fund (which is benchmarked to the Barclays U.S. Aggregate Bond Index) has posted a 2.71% return since the beginning of the year compared to a 2.72% return for the benchmark. The AIM Fixed Income Fund has posted a 6.26% annualized return since inception versus 5.87% for the Barclays U.S. Aggregate Bond Index. The non-risk-adjusted performance is displayed below:

	AIM Fixed Income Fund	Benchmark: Barclays US Aggregate Bond
Jun-11	-0.34	-0.29
Q2 2011	2.00	2.29
YTD 2011	2.71	2.72
1 Year	4.32	3.90
3 Years	6.92	6.46
5 Years	6.89	6.52
Since inception (Feb 2006)	6.26	5.87

Morningstar Direct's New Asset Allocation Module Adds Fat-Tail Modeling Capabilities

Dr. David Krause, AIM program director, has been using Morningstar Direct for the past seven years to track the performance of the AIM Funds and other investments. Krause said, “I had an opportunity earlier this week to work with the new asset allocation program in Direct and it is an outstanding tool for portfolio planning. It has some powerful features that allow for traditional mean-variance modeling, but it also has the latest in non-normal distribution and fat-tail modeling. It is a significant enhancement.”

Many financial have used models produced by Ibbotson Associates, which is now a Morningstar subsidiary, for asset allocation methodologies. Now Morningstar Direct has incorporated Ibbotson’s current methodology and a new alternative to the typical approaches to mean variance optimization to meet asset allocation needs.

With the latest update of Morningstar Direct it is now possible to use conventional mean variance optimization (MVO) or new models that utilize “fat-tailed” distributions and use other return and risk metrics. Some key features in Morningstar’s release of Asset Allocation include:

×      Asset class modeling: Model asset class behavior with the option to use traditional log-normal or fat-tailed and non-normal distribution assumptions

×      Optimization: Find optimal asset allocation policies using traditional MVO or other return and risk measures, including conditional value at risk (CVaR) and downside deviation

×      Forecasting: Calculate the probability of future wealth and return outcomes

Dr. Krause continued, “I’ve always been impressed with Roger Ibbotson and his ability to link academia and the applied world. I look forward to learning more about this new tool in Morningstar Direct and how I can incorporate it into the AIM curriculum. This asset allocation tool was sorely needed before the financial crisis and market crash of 2008 – I believe many portfolios would have been well served had they employed this type of fat-tail asset allocation modeling.”

Summer Finance Internships for Marquette's AIM Students in the Class of 2012

Dr. David Krause, Applied Investment Management program director at Marquette University commented, “Each of the students enrolled in the spring AIM course - FINA 4310 – has already started their summer internship. Similar to the AIM placement rate for our graduates, we have again achieved a perfect record in securing internships for our rising AIM seniors.”

Krause added, "The internship opportunities are with different types of finance firms - including asset managers, private equity firms, investment banks, consulting firms, private equity, and wealth managers. As shown below, the firms are geographically diverse and are located in major cities such as Milwaukee, Chicago, Seattle, and New York."

	AIM Class of 2012 Summer Internships
Student	Firm	Location
Jacob Bear	Cascade Investments	Seattle, WA
Sajid Bhimani	RMB Capital Management	Chicago
Brian Brophy	R.W. Baird	Milwaukee
Jacob Brull	Russell Investments	Milwaukee
James Carlson	Shatkin Trading Chicago	Chicago
Katherine Curiel	Northwestern Mutual	Milwaukee
Harrison Davis	Citigroup	New York
Kristina Gergens	UBS	Chicago
Christopher Gwinn	BNP - Paribas	Chicago
Leonard Hartanto	Timpani Capital Management	Milwaukee
Nick Hiller	Broadview Advisors	Milwaukee
Jeffery Hoffmeyer	Lakeview Equity/ Corporate Finance Associates	Milwaukee/ Chicago
Patrick Keeley	Northwestern Mutual	Milwaukee
Thomas R. Kelly	Stark Investments	Milwaukee
Daniel Leibforth	UBS	Chicago
Theodore Linn	Naval ROTC	Quantico, VA
Caitlin McMahon	BNP - Paribas	Chicago
Jonathan Nolan	Francis Investment	Waukesha
Vincent Ong	Johnson  Controls	Milwaukee
Colleen Osborne	BNP - Paribas	New York
Jonathan Schwerin	Windermere Wealth	Brookfield, WI
Rupali Varma	Bank of America Merrill Lynch	New York
Bronson Wetsch	Mason Street	Milwaukee
Alice Wycklendt	Heartland Funds	Milwaukee

Dr. Krause continued, “The AIM program provides employers with bright, educated, and motivated investment research and asset management professionals. We are very grateful to the many financial firms who partner with us in providing internships. Our students benefit from summer internships and we know that many employers return year after year to seek out talented students. It is a mutually beneficial arrangement."

For more information about the program please visit the AIM web site or e-mail Dr. David Krause at: david.krause@marquette.edu.