How NYU MBA Students Learn to Run Real Money

According to the student-run fund's records, since its inception, the total return for the fund has been 60.45%. This compares favorably to its blended benchmark (Russell's value, growth, and small-cap indices and Vanguard's Fixed Income Index) return of 41.06% -- outperforming it by 19.39%.

How the Fund Works

The MPSIF is part of a rolling two-semester course in investment management taught by Marciano. Class size is limited to about 46 students and competition for each one of those slots is intense. According to Marciano, "We receive on average about 45 to 50 student applications for a new semester and we select about 23 students from that pool. The returning [student] analysts [from the previous semester] make up the other 23 students."

Although the students make all the fund's investment decisions by consensus and basically run the whole show, Marciano acts as the faculty advisor to the fund, by offering students his unique combination of knowledge from his real-world finance experience at Goldman Sachs (GS - Cramer's Take - Stockpickr) and Morgan Stanley (MS - Cramer's Take - Stockpickr) and his academic background at the MIT Sloan School of Management and the University of Chicago Graduate School of Business.

How the Fund Is Broken Up

The MPSIF portfolio consists of four fund types : growth , value , small-cap and fixed income . This allows the fund as a whole to gain the benefit of diversification among different investment styles, reducing the overall portfolio risk .

Each equity fund (growth, value and small-cap) is organized by two administrative student managers, while the fixed-income fund is headed up by one student. The goal of each of these sub-funds is to own approximately 20 individual investments. Why 20? Marciano says, "Diversification benefits are very large with approximately 20 securities ."