A new year is
approaching, and you know what that means: Time to make resolutions.
Here's one idea that doesn't involve calorie counts or treadmills: Give
more consideration to small shops and lesser-known funds than you may
have in the past.
Not every small fund is notable. In many cases, an unheard-of fund
deserves its anonymity. But plenty of worthwhile offerings are out
there, with few assets and fewer distractions, just waiting to be
discovered. Give them a shot.
The Challenge
Of
course, some funds from the major complexes have earned their place in
the sun. But that's not the only reason so many lesser-known firms are
in the shadows. It's tough for investors to break through the deluge of
advertising and media coverage that keeps big shops in the public eye.
In addition, many investors have long and established
relationships--both personal and technological--with one or a handful
of large fund shops and thus feel that searching elsewhere for some
minnow isn't worth the effort. The giants also can afford fleets of
wholesalers to make regular contact with advisors.
The Internet can level the playing field to a certain extent.
However, people still must know about a fund or fund shop, and have
some interest, before they'll go to its Web site. The small firm's site
might be as technologically sophisticated as one from the big boys and
could well provide more useful information. But that won't matter if no
one knows about it.
They're Out There
It
can be difficult to learn about funds that don't come from the major
complexes. That's one reason why we often write about funds and firms
that are out of the limelight, hoping that some of you will investigate
and keep these options in mind. A number of such columns have appeared
on Morningstar.com this year. Interestingly, all of the funds discussed
in the articles listed below are run by advisors based far from the
major mutual fund capitals of New York, Boston, and Southern
California. That might help explain why they've remained under the
radar.
In August, we reviewed
an impressive but little-known pair of equity funds run by a small
family-owned advisory firm in North Carolina. Back in April we discussed
another small fund from the same state, along with a tiny international
small-cap fund from a Midwestern advisor.
