Investors seeking a fund focused on long-term returns might want to consider Bridgeway Aggressive Investors 2 (FUND: BRAIX). The fund has a record of solid outperformance since its inception, but its above-average market risk makes it unsuitable for short-term investors.
Fund facts
- Inception date: Oct. 31, 2001
- Expense ratio: 1.19%
- Net assets: $806 million
- Investment minimum: $2,000
Fund history
Bridgeway founder John Montgomery has managed the fund since 2001, using a quantitative approach. His focus, combining long-term performance with risk management, has solidly trounced the S&P 500 benchmark. The fund has returned an average of 20.3% in the past five years.
Bridgeway Aggressive holds just more than 60 securities, with top holdings including packaging company Owens-Illinois (NYSE: OI), fertilizer and feed supplier Mosaic (NYSE: MOS), and biotech Invitrogen (Nasdaq: IVGN). The fund's largest sector weights are in industrials, consumer non-cyclicals, and basic materials. The fund falls close to the large-cap/mid-cap border, with a portfolio median market cap of $9.65 billion.
Fees and risks
Bridgeway Aggressive Investors 2's performance-based management fee is somewhat unusual for a mutual fund. However, the fee aligns management's incentives with shareholders' interest in ensuring good long-term fund performance. In addition, the expense ratio is capped at 1.75%; even when the fund does really well, the performance-based fee can only go so high.
Bridgeway Aggressive has done well in the bull-market years since its inception. However, shareholders can expect to feel some bumps when the market falls. So far this year, the fund is down more than 9%. With portfolio turnover at a relatively high 124%, you'll also want to be careful about tax consequences.
Portfolio fit?
With "aggressive" in its name, you should expect this fund to offer some ups and downs in the short term, and you may need a strong stomach to handle that volatility. Nonetheless, Bridgeway Aggressive Investors 2 might be a good fit for those looking to build wealth over time.
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