Drake University students are marking a significant milestone in financial education and real-world investment experience. The Krause Fund, an undergraduate student-managed equity fund, is celebrating its 25th anniversary with impressive results that have consistently outperformed real-world investment fund market benchmarks.
Established in 1998 through a generous donation made by renowned Des Moines businessman and philanthropist, Bill Krause, the fund began with an initial investment of $100,000. Krause gave the same seed investment to several other universities in the state. This year, Drake’s fund reached a significant threshold when its value surpassed $1 million. This achievement underscores the success of the program in both educating students and generating strong returns.
Kevin Croft, Zimpleman College of Business professor at Drake, oversees the fund and the annual Krause Investment Challenge as part of the Equity Evaluation and Analysis elective course he teaches. Acting as the funds’ portfolio manager, Croft equips students in the class with the fundamentals of stock analysis before they select real companies and prepare comprehensive pitches about why a company’s stock should be added to the fund.
Simran Bhagat, a 2024 graduate who earned a degree in actuarial science and finance, took the course in the Fall 2023 semester. She said the course’s focus on real-world experience made it an enticing choice for her elective.
“I had friends who had taken the course in prior years with Professor Croft and they really enjoyed the experience,” explains Bhagat. “The course stretched my brain in a number of different ways. Ultimately, I think I’m better for it because of the technical knowledge that I gained and will be able to apply to my day-to-day work one day.”
Nick Pittman, a 2023 graduate from Drake, also took the course while he was earning his finance and data analytics degree. He said being able to see the tangible impact he was making on the fund throughout the semester was what was most appealing to him about the class.
“The fact that we were working with real money and real investments was a huge motivating factor,” says Pittman. “Just knowing that the recommendations I was making were going to have a very material impact on our portfolio motivated me to make sure I was doing the best work that I could and representing the University well.”
The fund’s performance speaks for itself. Over the last 25 years, Drake’s Krause Fund has achieved a compounded average annual return of 9.5%, surpassing the S&P 500’s 7.6% over the same period.
“Our students have demonstrated exceptional skill in portfolio management,” says Tom Root, finance department chair at Drake. “Their ability to consistently outperform the S&P 500 is a testament to Professor Croft’s expertise in enabling students to produce real-world results by combining both the academic knowledge and critical thinking skills they have developed at Drake.”
The fund’s success not only benefits the students involved but also contributes to the university’s financial strength. As the Krause Fund enters its next 25 years, it continues to provide Drake students with invaluable hands-on experience in investment management.
“The Krause Fund stands as a shining example of our commitment to experiential learning in finance at Drake,” says Root. “As we celebrate this milestone, we are looking forward to the next generation of Drake students continuing the success of the fund while, more importantly, developing skills that will launch them on a meaningful and successful career.”