Students in the Darwin Fenner Student Managed Fund course are doing more than just studying fund management. They're actively managing a $2 million stock portfolio-and beating many Wall Street mutual fund managers in the process.

Over the last four years, the portfolios in the fund-an undergraduate-managed large-cap portfolio and an MBA-managed mid-cap portfolio-have beaten their respective major stock indexes by as much as 19.6 percent in a year.

"The students have done a remarkable job," says Sheri Tice, associate professor of finance and instructor in the course. "In fact, they've done better than most mutual fund managers."

The fund was started as part of an MBA investment course in 1999, but Tice reorganized it in 2002 to be the centerpiece of an invitation-only honors seminar. Students spend the semester learning sophisticated methods for analyzing stocks and managing a portfolio, and they develop advanced processes to screen stocks and choose positions using the same research and electronic databases that PhD students and professional fund managers use. At the end of the semester, they put those skills to work as they buy and sell S&P 500 and S&P 400 stocks with the goal of generating higher returns than the respective indexes without taking higher risk.

Since 2002, the students have achieved that goal every year. The large-cap portfolio has outperformed the S&P 500 by an average of 2.3 percent per year, and since its launch last year, the mid-cap has outperformed the S&P 400 by 19.6 percent. The portfolios in the fund have also outperformed on a risk-adjusted basis, generating higher average monthly returns per unit of monthly volatility than their respective benchmark indexes.

And that superior performance continues. Since the students' most recent trade in May 2006, both portfolios are ahead of their respective indexes by about 2 percent. As of Aug. 9, the fund was $42,000 ahead of the indexes.

While the students can take pride in their performance, the true beneficiary of their skills is Tulane University. The fund, part of the university's endowment, has grown to $2,092,047 over the last four years, a gain of $664,672. Had the principal instead been invested in the S&P 500, the value today would be only $1,866,950.

"Brent Andrus, the chief investment officer of Tulane, was very concerned about the fund at first," Tice says. "He didn't want the students to generate less money for the university than he could make investing in an index fund. Needless to say, he's happy with the performance of the fund."

Along with the Burkenroad Reports equities research program, the Darwin Fenner Student Managed Fund is a major part of the Freeman School's experiential learning initiatives, which provide students with practical skills to give them a leg up in job placement. According to Tice, the combination of Burkenroad Reports and the Darwin Fenner Fund gives students a comprehensive package to show prospective employers. Graduates of the Darwin Fenner Fund have gone on to careers in both investment banking and portfolio management with companies like JPMorgan Asset Management and Goldman Sachs Global Investment Research.

"We're unique," Tice says in conclusion. "We have BSMs as well as MBAs in the class. The course is academically rigorous and not just an extracurricular. We invest real money-a lot of money-instead of doing it as a simulation. And the students themselves make the final investment decisions, not an advisory board of investment professionals. I think that adds up to a learning experience you won't find anywhere else."