Huge fund families dominate the mutual fund universe. Looking beyond those aristocrats, however, can uncover some funds with outstanding long-term track records.

As far as name recognition among mutual funds, big fund families have a clear advantage. They offer investors one-stop shopping for all their investments. The billions in assets these funds control give their managers the ability to pump up successes through extensive marketing campaigns. Typically, within any given fund family, some funds will do well, but others won't keep pace. Still, when a family has a few dozen different funds, at least one or two will usually do well to keep the marketing folks happy.

Independent funds, on the other hand, have to work harder. They can't rely on support from other funds, and they're often too small to market themselves aggressively. But that doesn't mean you won't find some great funds out there.

Bruce Almighty
One example of a strong-performing independent fund is the Bruce Fund (FUND:BRUFX). Over the past 15 years, this fund comes in near the top of the heap with returns of more than 16% annually. And with an expense ratio of just 0.78%, the fund is inexpensive compared to many actively managed mutual funds.

Unlike many funds that specialize in one particular area of the market, the Bruce Fund dabbles across several asset classes. Fund assets are split across stocks, convertible bonds, and zero-coupon Treasuries, as well as a substantial amount of cash. So to a great extent, the Bruce Fund resembles a balanced fund, making its performance even more impressive.

Run by a father-son management team, the Bruce Fund made a name for itself during the bear market of 2000-2002. They believed that the market gains in the late 1990s were unsustainable, so the fund made bets on a reversal. Although the fund underperformed dramatically while tech stocks soared, it turned in returns of 38% in 2000, 22% in 2001, and 9% in 2002 -- years where the overall market was down. It then built on those gains strongly in the ensuing bull market, with gains of 67% and 57% in 2003 and 2004, respectively.

The fund uses many angles to find profits. AMERCO (NASDAQ:UHAL), which operates U-Haul, was a bankruptcy play that brought spectacular returns for Bruce. The fund also bought into pharmaceutical company Elan (NYSE:ELN) before an array of its drugs came to market. More recently, plays like oil and gas developer Arena Resources (NYSE:ARD), tiny med-tech company NexMed (NASDAQ:NEXM), and miner Kinross Gold (NYSE:KGC) have delivered strong returns.

Growing pains
Yet success has come at a price. The Bruce Fund is small -- it holds about $350 million in assets. Yet even without advertising or broker sales support, the fund's performance has spoken for itself, leading to an explosion in growth. It managed just $8 million at the end of 2003.

Perhaps in response to this infusion of money, the fund's performance has leveled off in recent years. After decent returns in 2005 and 2006, Bruce is down over 3% year to date, despite strong performance in the bond market. A new investment in bankrupt Calpine hasn't yet panned out, while other existing holdings, such as Hercules Offshore (NASDAQ:HERO), have performed badly over the past year. The managers admit that they're unlikely to match their remarkable record from the first part of the decade, but they have no plans to close the fund to new investors.

Still, don't count Bruce Fund out yet. A healthy dose of humility is a nice thing to see from a fund manager. Once the managers figure out how to invest all their cash, you can expect to see more of the big bets that have made Bruce so successful.

It's easy to stick with a big fund family to handle all of your fund investing. But you risk missing out on great independent funds with strong track records. All it takes is a little searching to find some undiscovered funds with great potential.

Check these articles, too, to learn more about:

Bruce Fund isn't the only small fund that has delivered great performance. At the Fool's Champion Funds newsletter, Foolish fund expert Amanda Kish is on the hunt for the best funds, wherever they may be. See what Champion Funds has found -- start your free, 30-day trial today.

Fool contributor Dan Caplinger likes to see underdog, independent funds whip up on their bigger rivals. He doesn't own shares of the stocks mentioned in this article. The Fool's disclosure policy declares our independence.