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NEWS: 5/18/10

5/18/10 – Sound Financial Thinking for a New Decade

A New Decade

Most of these top funds are no longer undiscovered. Luminaries such as Bridgeway Ultra-Small Company Fund and Calamos Growth Fund are either closed to new investors or are so large that they're not the nimble players they once were. One thing that has been statistically proven is that size matters. "Asset size plays an important role in performance," says Jim Peterson, who heads mutual-fund research at Schwab Center for Investment Research in San Francisco. "Funds that get too large have trouble putting money to work." Some of the yet undiscovered gems of fund-dom, such as Auxier Focus Fund (AUXFX ) and Runkel Value Fund, are still small enough to be agile.

It's not a coincidence that Auxier and Runkel are also the managers' names. "Think of the confidence -- the pride -- it takes to name a fund after yourself," says Barry Glassman, an investment adviser at Cassaday & Co. in McLean, Va. "If the person's name is on the door, he's going to be around for a long time." According to a study Glassman conducted in 2003 of the 500 largest equity funds, 15 of the 16 named after their managers were still run by their founding manager, and the 16th, Davis New York Venture (NYVTX ), was run by the founder's son, Chris Davis. What's more, 14 of those funds had beaten the Standard & Poor's 500-stock index over the past five years -- 11 of them over the past 10.

"If I accept you as you are, I will make you worse; however if I treat you as though you are what you are capable of becoming, I help you become that"

- Johann Wolfgang von Goethe