A Sturdy Fund Reopens

Have you ever been annoyed that a terrific mutual fund you read about isn't available to you because it's closed? (Perhaps that happened to you recently when you read my article, "A Tale of Two Funds"?) Well, here's a chance to invest in a fund that had been closed for almost four years but has recently reopened to new investors.

The fund I'm talking about is the Oakmark Select (FUND: OAKLX) fund. We've brought it to your attention many times here in Fooldom. Here are just a few articles on it or its acclaimed manager, Bill Nygren:

• Master Value Investor Tells All by Matt Logan (this is a five-part series -- read it all)
• Big Discipline, Big Gains by Shannon Zimmerman
• 3 Mutual Fund Winners by Selena Maranjian

Now I have some bad news for you. But it isn't really too bad. It is this: You can't call up your broker and order shares of Oakmark Select. Instead, you'll have to buy the shares directly from the company. Learn more at its website. (See? I told you it wasn't so bad.)

For a little background information, know that Oakmark Select, born in 1996, says it seeks "long-term capital appreciation" and, "through a concentrated portfolio (15-20 companies), invests in mid- and large-cap companies based in the U.S." This setup is quite different from those of the typical mutual fund, which is often invested in more than 100 companies. That diversification can be effective, but it's harder to find 100 terrific investments than it is to find 20. Oakmark Select makes big bets, and if they pay off, the payoff is big. Over the past five years, the fund has gained an average of about 14% per year, much better than the S&P 500's average loss of 2%. Concentration makes for especially volatile returns, though. In 2000, the fund gained 26%, and then it gained another 26% in 2001, lost 13% in 2002, gained 29% in 2003, and gained 10% in 2004.

A recent Kiplinger's article noted, "The fund has done badly this year partly because Washington Mutual (NYSE: WM) had disappointing earnings -- although the stock is still up a bit this year. H&R Block (NYSE: HRB) also had disappointing earnings. Nygren is usually patient with companies that do poorly -- looking at the next three to five years, rather than the next quarter. Washington Mutual, for instance, trades at a P/E of less than 10 times his estimate of 2004 earnings, and yields 4.5%. 'Waiting a couple of years for the stock to go up isn't a very scary thought while getting a 4.5% yield,' he says."

Oakmark Select isn't the only solid fund out there, though -- there are many others, some of which focus on smaller companies, or foreign companies, or many other kinds of investments. You can easily invest in many of these funds through your friendly broker. If you're interested in discovering more terrific funds, check out a free sample of our Champion Funds newsletter, which recommends several each month.

Longtime Fool contributor Selena Maranjian does not own shares of any companies mentioned in this article.