Talk about bad timing? The AIM International Equity Fund was founded on September 22, 2008 - and it dropped nearly 50% within a month before the students even had an opportunity to populate the new fund with their own stock picks!
This week’s The Economist noted the 10 year anniversary of the fall of Lehman
Brothers (which is the event most linked to the Financial Crisis of 2007-2008).
The coverage story “Has finance been fixed?” is a worthwhile read for
any student of finance.
This month is also the 10th birthday of the AIM International Equity Fund.
As The Economist states, “When historians gaze back at the early 21st century, they will
identify two seismic shocks. The first was the terrorist attacks of September
11th 2001, the second the global financial crisis, which boiled over ten years
ago this month with the collapse of Lehman Brothers - who failed after losing
money on toxic loans and securities linked to America’s property market. Its
bankruptcy unleashed chaos. Trade fell in every country and credit supplied to
the real economy fell by $2trn in America alone.” The stock markets also
suffered severe loses.
As stated earlier, we will soon be noting the 10th
anniversary of the Marquette AIM International Equity Fund. On September 22,
2008, the Marquette Endowment transferred $500,000 to the students in the
Applied Investment Management program, who promptly invested it into three
international exchange traded funds (ETFs) for ‘safekeeping’ until they could
invest in individual stocks.
Before the AIM students could conduct the
analysis and purchase individual international stocks, the AIM International
Fund fell almost 50% in value! The table below shows the initial value of the
three AIM International Equity Fund holdings as of September 22nd
and the price per share of the three ETFs on October 27, 2008. The value of the
fund had dropped to less than $300,000 before the students had even populated
the fund --- talk about applied learning!
Fortunately, the global economy and world stock
markets have rebounded and the value of the AIM International Fund as of September
9, 2018, is nearly $665,000. While the ‘official’ performance of the fund will
be measured with an initial investment of $500,000 – the reality is that the
student-managers actually began with less than $300,000 and they - like the global stock market - have bounced back from the Financial Crisis.
Ticker
|
9/22/2008
|
10/27/2008
|
Return
|
EFA
|
$61.36
|
$37.51
|
-38.9%
|
EEM
|
$37.75
|
$19.30
|
-48.9%
|
EWC
|
$28.91
|
$15.79
|
-45.4%
|
