Fund Overview

The Henry Fund, named for its two founding benefactors, Henry Royer and Henry B. Tippie, provides select University of Iowa MBA students with a forum to blend academic rigor with real-world portfolio management experience. The fund was established with an initial investment of $50,000 in the spring of 1994.

The Henry Fund is an endowed equity portfolio required to meet the same basic performance guidelines as equity accounts in the University of Iowa's long-term investment pool. In keeping with these objectives, fund managers seek to achieve the highest level of return while maintaining a risk profile similar to the S&P 500 index. The Henry Fund team recommends a targeted portfolio of stocks from a broad set of industries, investing in well-managed, profitable businesses without unnecessarily exposing the fund to economic or industry risks.

The Henry Fund is managed by select MBA students enrolled in the Applied Securities Management course (class syllabus) at the University of Iowa. The two-semester course is limited to 12 students, selected by blind review. Students apply for the fund at the end of the fall semester by submitting an original research report for an assigned company. Each of the 12 analysts work within one of nine economic sectors: materials; telecommunications & utilities; consumer discretionary; consumer staples; energy; financial services (2); health care (2); industrials; and technology (2).

Each manager develops a fully integrated investment review, based on a top-down approach incorporating an extensive economic, industry, and company-specific analysis. Once the analyst evaluates the economic and industry value drivers, he or she researches specific companies for potential investment. Securities are valued using a variety of techniques including: discounted cash flow (DCF) analysis, economic profit, fundamental multiple analysis, and relative to comparable firms.

Fund managers serve as both sector analysts and portfolio managers, providing basic industry research, proposing investment ideas, and evaluating the ideas of the other managers. Following approval by the management team, each analyst presents their investment thesis to the fund's Investment Advisory Committee. Fund managers also perform the administrative tasks of portfolio management, such as marketing the fund to outside donors and producing the annual report.

Approximately 95% of Henry Fund assets are actively invested in equities of individual companies from diversified industries. This account represents the primary measurement of the managers' stock selection ability. Passive holdings in exchange traded index or sector funds are also used to provide liquidity and minimize benchmark tracking error of cash holdings. The fund uses 1% of its assets annually to award Henry Fund Scholarships to first- and second-year MBA students.