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If the Cap Fits

Gird your portfolio with value small caps.
Magazine Contributor
2 min read

This story appears in the August 2002 issue of Entrepreneur. Subscribe »

When the market slumps, it's often small-cap funds that shine. On top of that, the current undervalued share prices on some of them could be quite rewarding.

State Street Research's Aurora Fund (SSRAX) is a small-cap value fund that has a couple of things going for it: Morningstar gives it its highest rating of 5 stars, and Lipper Leaders gives it a No. 1 checkmark for "Preservation of Capital." Together, that tells you the fund has a solid history and performance worth investigating.

Over the past three- and five-year periods, the fund's average annualized returns were 32.1 and 23.5 percent, respectively, placing it in the third- and top-ranked position for their category, according to Morningstar. Through May 15, the Aurora Fund was up 15 percent.

John Burbank, the fund's manager since 1998, is a numbers guy and uses a bottom-up approach. "The sector weightings we end up with tend to be a byproduct of the decisions we make and not a driver of decisions," he says.

At the end of the first quarter, the fund was heavy in property casualty insurance, airline, automotive and gaming industry stocks. By the end of the year, that picture may change. But if the past is any indication of Burbank's management, no matter what the sector make-up is, the fund will still likely be an interesting one.

Phone number: 87-SSR-FUNDS (877-773-8637)

Dian Vujovich is an author, syndicated columnist and publisher of mutual fund investing site

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