The Bruce Fund (BRUFX) has consistently been one of the top-performing funds in the flexible or balanced fund categories. Returns are 11.95% so far this year, and were 32.24% and 29.08% for the past three- and five-year periods. This excellent performance comes from making solid investment choices and sticking with them, keeping annual turnover to 29%.
BRUFX is flexibly managed, investing in stocks and bonds as well as cash. The fund had nearly 40 stock positions at the end of the second quarter of 2006, making up 35% of the fund's portfolio. The top five stock positions at that time were Arena Resources
Bonds were 26% of the fund, with convertibles comprising the largest portion of that at 23%. The managers seek out distressed securities which can be profitable, but also pose potential risks. Money market investments were 38% of assets. That high cash position can be a drag on performance, but it also indicates the managers' willingness to wait for the right opportunities to invest.
The fund has a moderate expense ratio of 0.94% and requires a $1,000 minimum investment. The managers want investors to be focused on long-term investing, so they don't make it easy to buy or sell the fund. Purchases and redemptions are by mail only. In addition, the fund is not available to investors in Nebraska and Texas because of blue sky laws.
Since October 1983, the fund has been managed solely by the father-and-son team of Robert B. Bruce and R. Jeffrey Bruce. Robert B. Bruce is also the fund's chief compliance officer. Like many other small investing shops, the managers must wear many hats.
The long tenure of BRUFX's managers and the fund's consistent performance, combined with its moderate fee level and low turnover, make the Bruce Fund a name worth remembering for mutual fund investors.
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Fool contributor Zoe Van Schyndel lives in Miami and enjoys the sunshine and variety of the Magic City. She does not own shares in any of the funds or companies mentioned in this article. The Motley Fool has a disclosure policy.