Little by Little

Small-cap funds have held their own in this year of market turmoil. But even among the small stuff, you've got to know where to look for a sound investment.

Take the Bridgeway Ultra-Small Company Tax Advantage Fund (BRSIX). This mouthful of a fund is a passively managed index fund that invests in the tiniest of companies-the ultra-small caps. And it's a quant fund: There are no visits to companies for John Montgomery, the fund's manager. No, choosing which companies best replicate his chosen index is all a matter of working with computers and numbers.

The Center for Research and Security Prices Cap Based Portfolio 10 Index (CRSP), another mouthful, is the index Montgomery's fund is designed to mimic. It's run by academics out of the University of Chicago.

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Montgomery fancies the ultra-small companies because of their high reward potential. "The big kick for extra returns within small companies is in the very smallest companies," he explains. But getting at those extra rewards means taking on extra risks.

So even though the fund was up 12.6 percent through August 22, understand that there's never been a risk-free lunch on Wall Street.

Performance: Year-to-date through August 22, up 12.6 percent

Web site:www.bridgewayfund.com

Toll-free number: (800) 661-3550

Dian Vujovich is an author,syndicated columnist and the publisher of fund investing site www.fundfreebies.com.