Welcome, Fools, to part 21 of our several-thousand-part series, "Better Know a Stock Picker," which is loosely -- but not too loosely -- based on Stephen Colbert's "Better Know a District" from The Colbert Report.
Like Stephen and his thorough investigations into America's congressional districts, each week I take a look at a fund you may want to own. What's on tap this week?
|
Bruce (BRUFX) |
|
|---|---|
|
Expense ratio |
0.94% |
|
Fund size |
$261 million in assets |
|
1-year return |
12.83% |
|
5-year return |
29.11% |
|
10-year return |
19.72% |
Top 10 holdings
|
Company |
% of Assets |
|---|---|
|
Arena Resources |
4.20% |
|
AMERCO |
3.58% |
|
AirBoss of America |
2.98% |
|
iBasis |
2.48% |
|
Terremark Worldwide 9% notes |
2.05% |
|
America Service Group |
1.97% |
|
Curagen 4% notes |
1.91% |
|
SPACEHAB 8% and 5.5% notes |
1.78% |
|
Isis Pharmaceuticals Cv 5.5% notes |
1.67% |
|
Epix Med 3% notes |
1.65% |
Meet Robert and Jeff Bruce
The fightin' team at the Bruce Fund is led by the father-and-son team of Robert and Jeff Bruce, who yesterday enjoyed their 23rd anniversary in the mutual fund business.
It's been a good run; father and son have together amassed a remarkable record in sticking it to the Street's stockinistas. For example, over the 15-year period ended in December 2004, the Bruce Fund returned 15.4% annually, 4% a year better than the S&P 500. And over the past 10 years, Bruce has whacked the S&P by a margin of 19.88% vs. 8.31% annually.
Certainly that record benefited from a spectacular 2003 and 2004, during which Bruce earned market-thumping returns of 66.8% and 57.2%, respectively. But this fund isn't some two-hit wonder. Bruce outperformed its category average in 2005, and it's doing so again -- by 6% -- this year, according to Yahoo! Finance. Eat that, Wall Street.
How they invest
What's the secret to the fund's success? Robert and Jeff aren't eager to say. My search of the Web shows exactly zero interviews given by the pair. And further attempts to dig into the fund at its Web home were met with what appeared to be a dead link. (Well, it's either that, or Robert and Jeff have me on notice.)
We press on nonetheless, by sifting through the latest letter to shareholders and Bruce's off-the-wall investments. First, let's review the letter, which says that Bruce has taken a more conservative stance in its investments recently, because of uncertainty in the markets and economy. That's fund code-speak for a lack of bargains.
For that reason, Robert and Jeff write, roughly 38% of the fund was in cash as of the annual report in June. With value geeks and-growth huggers alike driving the Dow over 12,000 as of this writing, there's every reason to believe that Bruce still has a plurality of its assets in cash.
The rest, however, may be in convertible notes and beaten-down stocks. Both American Italian Pasta
Is this fund for you?
Can the Bruce team deliver like Peter Lynch? Its scrounge-for-value approach has certainly worked well for top-notch stock pickers such as Marty Whitman, while the hunt-for-yield strategy has been kind to billionaire bond investor Bill Gross. Bruce seems to borrow from both approaches to its and its shareholders' benefit.
What's more, the fund sports a championship-caliber expense ratio of just 0.94%. I'll take that any day if I can get the performance Bruce has historically delivered. And yet Motley Fool Champion Funds advisor Shannon Zimmerman hasn't yet seen fit to add Bruce to his portfolio. I may find that somewhat mystifying, but it's hard to argue with Shannon; his picks have outdistanced their relative benchmarks by nearly 8% as of this writing. (Try the service free for 30 days to get a peek at the entire portfolio of Champs.)
That's this week's profile. See you back here next week, fund nation. Good night.
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Fool contributor Tim Beyers is a regular viewer of The Colbert Report. (Stay the course.) Tim didn't own shares in any of the companies mentioned in this story at the time of publication. Get the skinny on all of the stocks in Tim's portfolio by checking his Fool profile. Merck was a former Income Investor pick. The Motley Fool's disclosure policy is always championship-caliber.
