Welcome, Fools, to part two of our several-thousand-part series, "Better Know a Fund Manager," 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. Who's on tap this week?
|
T. Rowe Price New Horizons (PRNHX) | |
|---|---|
|
Expense ratio |
0.84% |
|
Fund size |
$7.3 billion in assets |
|
1-year return |
16.99% |
|
5-year return |
8.72% |
|
10-year return |
8.31% |
Meet John Laporte
The fightin' team at New Horizons is led by John Laporte, who's been at the helm since 1987. And his performance during that time hasn't lacked the zazz that savvy investors demand. For example, through December, New Horizons had returned an average of 14.85% annually over the past 15 years.
I guess that's how it goes when you hire an Ivy Leaguer. Laporte joined T. Rowe Price in 1975 after earning an undergraduate degree from Princeton and an MBA from the Harvard Business School. Show-off.
How he invests
Laporte likes the small stuff. And when I say "small," I mean "small caps." New Horizons is a small-cap fund. Or, in marketing-speak, New Horizons invests in "emerging growth companies, preferably early in the corporate life cycle before a company becomes widely recognized by the investment community." Blah, blah, blah.
Although small caps have utterly destroyed large caps in terms of real returns over the past several years, leading some to conclude that large caps will rally, Laporte isn't letting Wall Street's stockanistas sway him from his strategy. And that takes guts. I mean, how many of you would have been willing to plunk down millions in late 2004 on a money-loser such as Vertex Pharmaceuticals (NASDAQ:VRTX), as Laporte and his team did? Me, neither. But look at how the shares have performed over the past year.
Is this fund for you?
A stock investor like me isn't likely to cast his lot with Laporte. But fund guru Shannon Zimmerman is positively sunny on New Horizons. So much so, in fact, that he's added it to the Motley Fool Champion Funds portfolio. The fund is up more than 35% since joining the elite ranks in October 2004.
Be aware, however, that this fund comes with a modicum of risk. According to its recent filing, 8.2% of New Horizons is invested in biotechs such as microscopic EXACT Sciences (NASDAQ:EXAS) and Memory Pharmaceuticals (NASDAQ:MEMY). The fund also has more than $25 million of its assets tied up in -- gulp -- XM Satellite Radio (NASDAQ:XMSR) and TiVo (NASDAQ:TIVO). In other words, investing with Laporte could be like taking your portfolio on a tour of the world's scariest roller coasters. That could be both fun and rewarding. Or, you know, utterly frightening.
And that's this week's profile. See you back here next Thursday, fund nation. Good night.
Think you can't beat the market with funds? Think again! The selections in Shannon Zimmerman's Motley Fool Champion Funds portfolio, including T. Rowe Price New Horizons, are up an average of 17% versus just 7% for their comparable benchmarks. Ask us for an all-access pass to get an unfettered look at all of Shannon's picks, manager interviews, and model portfolios. Go ahead; it's free for 30 days and there's no obligation to buy.
Fool contributor Tim Beyers is a regular viewer of The Colbert Report. (Stay the course.) Tim didn't have a financial interest in any of the stocks or funds mentioned in this story at the time of publication. You can find out what is in Tim's portfolio by checking his Foolprofile. XM Satellite Radio and Vertex Pharmaceuticals are Rule Breakers picks. TiVo is a Stock Advisor selection. The Motley Fool has an ironcladdisclosure policy.
