There's something provocative about independence. You know, not following the crowd and going your own way. But when it comes to investing your money, do you really want a fund manager with a cavalier style? Or do you lean more toward a staid business school approach to money management? Whatever your answer, here's a fund with both.
The Muhlenkamp Fund is a quirky little stock fund that's been around for more than a decade. It's quirky because Ronald H. Muhlenkamp has a mind all his own and invests the fund's money into any asset class he chooses. It's little because after nearly 10 years, the fund has just slightly more than $206 million in assets--which puts it in the small-cap category.
But look deeper, and you'll find a fund with big-time historic returns. In 1997, while the S&P 500 ended the year off a tad, the Muhlenkamp Fund was up 33.30 percent. By mid-September 1998, when the entire market was getting creamed and the S&P was off nearly 14.5 percent, the Muhlenkamp Fund was down half as much (6.43 percent). Since its inception in 1988, it has provided its shareholders with an average annual return of nearly 14.75 percent.
At press time, the Muhlenkamp Fund had 53 stocks in its portfolio. With 20 different industry sectors represented, the five industries with the heaviest weightings were insurance (9.1 percent), capital goods (6.1 percent), autos (6.1 percent), airlines (5.7 percent) and finance (5.3 percent). The fund has over 8 percent in cash and more than 15 percent in bonds.
One of the problems investors have when looking for a value-oriented, no-load fund like this one is finding it. Morningstar gives the fund a three-star rating and classifies it as a mid-cap value fund. Value Line, another mutual fund research company, lists it as a growth and income fund. Yet neither classification really rings true.
Why? For openers, the fund generates very little income. So if it's current income you want, you should probably avoid the Muhlenkamp Fund. And if it's only mid-cap stocks you're after, you might want to forget the Muhlenkamp Fund again. But if you're into value and don't care where it comes from--stocks of any size, bonds or cash--give this fund a look. You may find this amazingly tax-efficient capital-appreciation fund to be of interest. From its inception through 1997, the fund has made only two capital gains distributions. Together, they amounted to 36 cents per share.
On the downside, the fund hasn't weathered any lengthy flat or bear markets. Nor can anyone predict how it will fare as its assets grow. So, while you can't tell what its performance future holds, one thing is certain: Its past performance has been good enough to get the fund noticed.
Dian Vujovich is a nationally syndicated mutual fund columnist and author of Straight Talk About Mutual Funds (McGraw-Hill), Straight Talk About Investing for Your Retirement (McGraw-Hill), and 10-Minute Guide to Stocks (Macmillan).