Trading ended Friday on the Burkenroad Fund, a unique small cap mutual fund set up by students at Tulane University’s A.B. Freeman School of Business.
The fund was established Dec. 31, 2001, and focused on publicly traded companies headquartered in Louisiana, Alabama, Florida, Georgia, Mississippi and Texas. That’s similar to the Burkenroad Reports program at the Tulane business school, where students track small companies located across the South.
Peter Ricchiuti, who founded and directs the Burkenroad program, said Hancock Whitney Bank decided to get out of the mutual fund business and sold all of its funds to Federated. Investors who had money in the fund could either cash out or roll their investments in one of Federated’s small cap funds.
“I wasn’t surprised at this decision,” he said. “Mutual funds have become a tough place to be.” There’s a trend toward funds in which shares are sold without commissions or sales charges.
Ricchiuti said when Tulane started the Burkenroad Reports in 1993, it was the first university to produce investment research. Eight years later, it became the only university to have research utilized by a mutual fund that was made up mainly of the businesses it tracked.
David Lundgren, the chief investment officer for Hancock Whitney, said the Burkenroad Fund posted annualized total returns of 10.8% from its inception to August 31. Over that period, it performed better than two other indexes tied to small cap stocks: the S&P SmallCap 600, which had annualized total returns of 1.7% and the Russell 2000, which had a 9.7% return.
Someone who invested $10,000 in the Burkenroad Fund at the time it was established would have nearly $60,000 today, Ricchiuti said. The fund outperformed the broader market because so many of the small businesses in its portfolio ended up getting bought out by larger companies. Generally when a company is purchased, the buyer pays 35% more than the current stock value, he said.
Ending the Burkenroad Fund will not have an impact on the Tulane program. “Our relationship with the fund represented only a small portion of the program,” Ricchiuti said.