There's a lot going on in the mutual fund world -- and if you miss something, it could end up costing you money. To keep you up-to-date and on top of things, we're scoping out some of the recent happenings in the mutual fund industry during the past week, and discussing how they may affect your portfolio.

Miller back on top
A few years ago, manager Bill Miller got a lot of attention for his 15-year streak of beating the S&P 500 Index, as measured by the performance of his Legg Mason Capital Management Value Trust (LGVAX). Of course, not long thereafter, the fund jumped the rails. It lagged the market by rather wide margins in 2006 through 2008, losing an annualized 23.7%, compared to the S&P 500's 8.4% average loss per year. Everyone wondered whether Miller had lost his touch.

After trailing again in 2010, however, Miller is back on top in 2011. According to Bloomberg data, so far this year, Miller's fund gained 5.4% in January, putting it ahead of 91% of its peers, thanks to the strong rebound in many of his underperforming stock picks from last year. However, over the past decade, the fund still ranks behind 97% of its competition, so there's still a lot of ground to gain back here.

Miller's troubles in recent years indicate the potential woes that even good managers can encounter from time to time. Investors should use this fund's travails as a warning not to pile into hot-performing funds, expecting them to continue leading the pack just as strongly as they have in the past. Ups and downs are just a part of the market, and Foolish investors need a long-term focus to succeed.

Clearly, investors shouldn't put too much stock in one month's worth of performance, but I think there's a good chance that better days are ahead for this fund. Its portfolio has a decent allocation to cheap tech stocks, including IBM (NYSE: IBM) and Texas Instruments (NYSE: TXN), which trade at P/Es of 14.1 and 13.5, respectively. I think there's a lot of potential in the tech sector, and reasonably priced blue-chip names like these should do well. While I personally think there are many better large-cap fund options than Miller's Value Trust, the fund may be worth a second look if you can buy it without paying the front-end load.

A new arrival
Some fund shops seem to come out with new products every week, throwing them at the wall to see what will stick. Other fund firms rarely introduce new funds, only doing so after careful consideration and planning. Chicago-based Ariel Investments is one of the latter firms.

Ariel recently launched the Ariel Discovery Fund (ARDFX), its fourth such offering. Ariel Discovery will invest in a focused portfolio of small-cap companies, with David Maley, who runs Ariel's micro-cap strategy, at the helm.

I like the investment approach at Ariel, and I think highly of the mid-cap Ariel Fund (ARGFX), so I think this new fund could be worthwhile. I'm not generally a fan of new funds, but when a newly launched fund has the backing of a time-tested strategy behind it, my concerns about long-term consistency diminish. However, investors who choose to buy Ariel Discovery, or any other small-cap fund, should keep in mind that small caps probably won't continue to lead the market as they have in recent years. While having a solid small-cap allocation over the long run is a sound strategy, you should keep your expectations in check for the near term.

And if past performance at Ariel's other funds are any indication, performance might be choppy at times. The Ariel Fund likes names such as for-profit educator DeVry (NYSE: DV), which management thinks is both cheap and a higher-quality offering than many of its peers, and media firm CBS (NYSE: CBS), which the team feels faces near-term challenges but should rebound strongly as the economy improves. Contrarian picks like these can mean that the fund moves out of step with the market at times, but its long-run returns have been pleasing. Investors who sign on with newly formed Ariel Discovery should be on the lookout for similar volatility and return patterns.

Fund love
Actively managed mutual funds haven't gotten a whole lot of love in recent years, compared to their passively managed counterparts in the world of exchange-traded funds. But in the commodity arena, funds have been a clear winner. According to the Wall Street Journal, commodity mutual funds experienced much greater inflows last year than did similar ETFs, with mutual funds raking in $11 billion in net inflows in 2010, while commodity ETFs only got about $1 billion.

Many speculate that because ETFs typically hold futures contracts on their various commodities, they are more vulnerable to contango effects (when the futures price exceeds the expected future spot price, leading to price declines) as well as potential front-running, making them less popular with investors. However, ETFs that invest in the actual underlying commodity, such as SPDR Gold Trust (NYSE: GLD), iShares Silver Trust (NYSE: SLV), and iShares Gold Trust (NYSE: IAU), have bucked the trend, enjoying greater net inflows than similarly managed active funds.

I think commodity investors need to be careful right now that they're not justjumping onto the bandwagon. While a small, broad-based commodity allocation may make sense as a diversification move, make sure you're not loading up on these funds, especially in the precious-metals industry, just because they have done well recently.

However, if you still want exposure to the metals market, keep your allocation small. Sticking to ETFs like the ones mentioned above is probably a good move here. If you're looking for a broader commodity play, consider an actively managed fund like Pimco Commodity Real Return Strategy D (PCRDX), but be prepared for some volatility. Whether you choose ETFs or active funds to fill a commodity-linked role in your portfolio, remember to keep your allocations on the lower side, and invest for the long run. There will be more bumps in the road ahead.

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Amanda Kish is the Fool's resident fund advisor for the Rule Your Retirement investment newsletter. At the time of publication, she did not own any of the funds or companies mentioned herein. The Fool owns shares of International Business Machines and Texas Instruments. Try any of our Foolish newsletter services free for 30 days.

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