Hart Fund
Friday, May 3, 2019
By Rebekah Tilley

Lorraine Hart (MBA75) was part of the first wave of women who began bringing diversity to the financial industry. Now she is leveraging her career success to diversify experiential-learning programming for a new generation of Tippie finance students by launching the college’s first student-managed fixed-income investment fund: the Hart Fund.

The Hart Fund joins the college’s portfolio of student-managed funds: the Henry Fund, an equity fund managed by a select group of graduate students, and the Krause Fund, an equity fund managed by undergraduate students enrolled in the upper-level Applied Equity Valuation course. Similar to the Henry Fund, the Hart Fund will be managed by graduate students enrolled in the college’s Master of Finance program.

“Offering a fixed-income fund is a brilliant mix of opportunity for finance students to gain hands-on experience in the whole portfolio management process for fixed income, and to provide it while at Iowa so they can leverage that experience as they begin their careers,” says Hart, who leveraged her MBA from the university to launch her own career in investment management.

“I didn't leave Iowa saying, ‘I want to spend my career as a fixed-income manager.’ But when I was offered a position in investments, I said yes. And it just happened to be an excellent fit, and I stuck with it throughout my career,” Hart explains.

Hart took early retirement from her role as vice president of investment with Ameriprise Financial in 2006 and since then has devoted her time to nonprofits and foundation boards as a volunteer. This included a six-year term as an advisor to Tippie’s Krause Fund. When she began a conversation with the college’s Department of Finance about how she could best support its goals, Hart found the opportunity to launch a fixed-income fund incredibly compelling.

“The world of fixed-income investing is an important part of any diversified portfolio,” says Hart, who is on the inaugural advisory board for the Hart Fund. “I thought this is a terrific opportunity to add fixed income to the equity experience Iowa students are already getting.”

While the stock market provides a popular backdrop for Hollywood films about finance, the bond market has quietly been in a period of explosive growth. According to the Motley Fool, the bond market has more than tripled over the last 15 years and now exceeds $100 trillion globally. There is a crucial industry need for analysts who have already connected classroom theory to a trade desk. The Hart Fund rounds out an exceptional educational portfolio equipping Master of Finance students with the hard and soft skills needed to succeed.

“Every time we’ve put out the call for alumni support, whether financial, experiential, or advisory, it’s been answered,” says Tom Rietz, Department of Finance Executive Officer and Soumyo Sarkar Professor of Finance. “Lorraine is an incredible role model on a number of levels, and the department is stronger because of it.”

Hart Fund

The Hart Fund is just wrapping up its first semester under the direction of Dirk Laschanzky, CFA (BBA88/MBA97), who has taught in the Professional MBA Program since 2001 and retired from portfolio management with Principal Global Investors in 2016 to teach full-time. Laschanzky says that while there are hundreds of business schools that offer hands-on equity management experiences, there are considerably fewer opportunities in fixed income even though bonds are a significant component of the marketplace.

“In the bond world, buying a security is not like buying IBM or Apple stocks, because securities are not always available,” explains Laschanzky. “So you have to look at what's available in the marketplace, what's tradable, and what kind of market impact you have when you trade those securities. The very act of buying a bond is a critical part of the students' learning, and the Hart Fund experience will differentiate our students to employers.”

It’s a differential that Derek Foster (BBA13) hopes Tippie students will leverage when they are interviewing for jobs. Foster is a member of the Hart Fund advisory board and a research analyst with Allstate Investments.

“In my job, I make investment decisions regarding our fixed income investments in the power, oil and gas, and chemical space,” says Foster, who, after graduating from Tippie, declined a full scholarship to the Full-time MBA Program and opted for a Master of Science in Finance degree from the Eller College of Management for its CFA and fixed income focus. “What I'm hoping for the Hart Fund and the opportunity I wish I had been given is for students to employ option-adjusted spread, duration, portfolio construction, liability matching, and other themes that are learned from a textbook, and apply them with real money on the line.”

With the Hart Fund experience in their back pocket, Foster anticipates Tippie students will be able to walk into any interview room and close the deal.  

“Just to put it all on the table, I'm tired of hiring Badgers. I'm tired of hiring Illini. This is a great opportunity for Hawkeyes to get a leg up during recruiting and get involved in the fixed-income markets,” says Foster.

This article first appeared in the 2019 edition of Exchangea magazine for alumni and friends of the UI Department of Finance. Photo by Justin Torner/University of Iowa. Illustration by Melissa Weber/The Williams McBride Group.