(MONEY Magazine) – Would you invest your money in a mutual fund managed by a group of business school students? Well, 43 well-heeled investors, including the chief financial officer of EDS and a managing director at blue-chip brokerage J.P. Morgan, are doing just that. They're shareholders in the two-year-old, $3.3 million MBA Investment Fund, run by 15 M.B.A. students at the University of Texas at Austin under the supervision of finance department chairman George Gau. So far, MBA's returns haven't been too shabby: During its first 15 months, the fund returned an average of 22% annually, beating Standard & Poor's 500 by more than three percentage points.

Individual investors, take note: You can use many of the techniques the students employ. The MBA fund, which invests mainly in growth stocks like Intel and Citicorp, follows a two-pronged strategy. First, the group identifies economic sectors it thinks will outperform the S&P over a 12- to 18-month period. Each student is then assigned one sector and told to find worthy investment candidates in it. In this respect, it operates much like an investment club. Before a stock is added to the portfolio, it must pass muster with the five students who make up the investment team and an outside investment pro who advises the fund. "It's always valuable to get an outside opinion before buying a stock, because people working in a group tend to want to support each other," says Gau. Stocks are generally liquidated if they fall 15% to 20% below their purchase price. Students are also assigned to jobs as the fund's trader, portfolio manager, economist and research director. The MBA fund has some special advantages, though, like an $8.5 million trading and research center that gives students access to the same sophisticated information the pros use.

The fund's stunning 19.7% gain for its first six months, ended May 31, 1995, put it in the top 5% of U.S. diversified funds. For the nine months ended Feb. 28, 1996 (the fund changed its fiscal year), it was in the top 28%.

These days the fund is reducing its risk by going for big, relatively stable companies. Two recent picks: Boeing (New York Stock Exchange, $91.50) and McDonald's (NYSE, $47).

--Ruth Simon