Worried about client returns as we head toward another possible downturn? Want to find an undiscovered or overlooked manager to get in with early? Here are a few flying below the radar (for now). They have solid performance with relatively low assets under management–which equals opportunity for you and your clients. Look for more overlooked mangers each month in Investment Advisor magazine.
1). Janus Triton Fund (JGMAX)
We know what you’re thinking–how could any Janus fund possibly qualify as “overlooked?” The Denver-based fund manager gets more ink than Lindsay Lohan–good and bad. But the Janus Triton Fund’s one year return is 22.46%, its five year return is 7.74% and it’s returned 7.52% since inception, all with only $617 million in AUM.
“We use the same in-depth fundamental research process that Janus is known for, but we apply it to smaller cap companies that we believe have the opportunity to mature into the mid-cap space over time,” says Brian Schaub, who co-managers the portfolio with Chad Meade. “What differentiates us from a traditional small cap offering is that we’re able to capture that entire return as the company migrates from a small cap to a mid-cap.”
2). Sierra Core Retirement Fund (SIRAX)
David Wright and Kenneth Sleeper, co-founders and managers of Sierra Investment Management, understand that the nature of the risks inherent in every asset class is far more important to portfolio management than trying to opportunistically grab the possible returns they offer. Different asset classes behave in different ways at different times, and the duo–who have been managing money in separate accounts for close to 23 years and launched the Core Fund in 2007–spends two- thirds of their analytical time studying risk just so that they can understand these peculiarities. They look to measure how a particular asset class has reacted over time to different market conditions and how it will perform, in light of this, going forward. They follow this diligent risk management practice, Wright says, so that they can come up with their own proprietary disciplines that will then enable them to meet their dual goal of limiting the downside on the $370 million Core Fund by exiting problem areas before they sink, and delivering realistic, consistent returns to investors by taking advantage of any sustained upward movement in a given asset class.
“Even in a very ugly month or quarter,” Wright says, “we want to limit the downside of the portfolio to 4% or 5% and our goal is to average 8% or 10% over a market cycle.”
3). Capital Advisors Growth Fund (CIAOX)
The defensively managed Capital Advisors Growth Fund outperformed the S&P 500 by 12.82% for the last bear market period from October 9, 2007 to March 9, 2009. Morningstar ranks the fund in the top 20% of all equity funds for its performance during bear market months over the last five years ending May 31, 2010. Morningstar credits the fund with low risk and above average returns for the three- and-five year-periods ending May 31. Lipper rates the fund a “5″ (best measure) in its category for Capital Preservation.
How do co-managers Keith Goddard and Channing Smith get these results? They focus on high-quality blue chip companies that are undervalued, financially stable and exhibit shareholder-friendly activities such as dividends, share buybacks and accretive acquisitions
4). Mirzam Capital Appreciation Fund (MIRZX)
lbert Meyer, president and manager of the $8.9 million Mirzam Capital Appreciation Fund, understands stock options and why companies give them to their senior executives, but he still despises them. Although Meyer knows that the use of incentive options cannot be completely avoided, he’s made it his goal as MCAF’s manager to only invest in those companies where stock options are minimal.