Fit to Commit
Look into the background of a fund's portfolio manager, and you're bound to learn a lot about how that fund is managed. Charlie Dreifus has been at the helm of the Royce Special Equity Fund (RYSEX) since it began in 1998. Over that time, not only has the fund had an impressive performance record--last year, it ranked No. 1 of all small-cap value funds tracked by Lipper--but it has had only one down performance year.
Dreifus purchased his first stock at age 13 and learned about investing from value gurus Benjamin Graham and Warren Buffet and accounting critic Abraham Briloff. Then there's his experience prior to joining Royce, a fund family specializing in small-cap value investing. It includes time in mergers and acquisitions while working for Lazard Freres & Co. Put all that together, and you'll find a fund manager who hates to lose money for his shareholders and purchases micro- and small-cap stocks for the fund's portfolio at bargain prices.
The downsides to this fund are the cycles that value and small-cap investing go through and the 1 percent redemption fee for exiting the fund within the first six months of share ownership. But for those with an investment horizon of five years or more who are fans of this investment style, this fund is worth investigating.
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Dian Vujovich is an author, syndicated columnist and publisher of the fund investing site www.fundfreebies.com.