A Step Ahead Aggressive, fast-moving fund targets growth companies.
Opinions expressed by BIZ Experiences contributors are their own.
A big part of staying ahead of the competition is sweating thedetails. Inspiration and talent help, but to deliver results,you've got to work hard.
When it comes to investments, it's hard to find a betterexample of these precepts than Greenville, Delaware-basedBrandywine Fund. By doing intensive research and keeping itsportfolio flexible enough to act quickly as market conditionschange, the fund has consistently chalked up higher returns thanmost rivals since it started in December 1985.
Brandywine invests based on research done by six separatemanagement teams, with lead manager Foster Friess overseeing thefund's portfolio. Each team follows a constant strategy,seeking out companies with robust historical earnings and stronggrowth prospects.
Specifically, Brandywine targets companies with annualearnings-growth rates of at least 20 percent to
30 percent and the potential to do even better. Companies must alsohave high sales growth and clean balance sheets.
To make sure companies will be able to sustain their growth,Friess and his associates conduct an intensive series of companyvisits. They not only meet with the companies' managers butalso with suppliers, customers and competitors to make surethey're getting the full story on a company's strengths andweaknesses.
Because the market's fastest-growing companies tend to befound in the same segments of the economy, the portfolio tends tobe concentrated in certain sectors. As of September 1996, forexample, about 40 percent of the fund's assets were invested incomputer hardware, software and other technology-relatedissues.
If a company doesn't live up to expectations, management isquick to move on. Last year, for example, the fund sold shares inSears Roebuck and Gap Inc. to make room for more technology stocks,including Intel Corp., Cisco Systems Inc., Computer Associates andCompaq Computer Corp. All in all, the fund's fast-paced stylehas left it with a turnover rate roughly twice that of the typicalgrowth-style fund.
This aggressive style has worked remarkably well. Investors whoput $10,000 in the fund 10 years ago would have seen that grow tonearly $58,000--an average increase of more than 19 percent a year.Over time, the fund has been more rewarding than almost any otheroffering with a similar investment style. Although it couldn'tquite keep pace with funds that focused more heavily on smallerstocks in 1991, Brandywine has typically outperformed most rivals.In 1996, for example, it finished the year with a 24.9 percentgain, ranking in the top 10 percent of Morningstar's midcapgrowth category.
But the fund also has some drawbacks. Its aggressive strategycan make it vulnerable to sudden market corrections. During thestock market's decline in the fourth quarter of 1987, forexample, it dropped nearly 30 percent. It also lost close to 19percent when the market sold off in 1990's third quarter. Inaddition, the fund requires at least $25,000 to open an account,making it off-limits for some. If you can afford the minimuminitial purchase, however, Brandywine is an attractive option.There are no sales charges, and the fund's annual expenses arerelatively low.
Overall, this fund is a good choice for investors seekinglong-term capital growth. Not surprisingly, it's attracted alot of attention: Thanks to its strong historical performance, itnow manages more than $6 billion in assets.
At A Glance
Fund name: Brandywine Fund
Managed by: Friess Associates, Greenville, Delaware
Total assets: $6 billion
Annualized return:
One year: 24.92%
Three years: 19.26%
Five years: 19.19%
Ten years: 19.20%
Load: None
Minimum initial investment: $25K
Contact Sources
Brandywine Fund, P.O. Box 4166, Greenville, DE 19807,(800) 656-3017.
Amy C. Arnott is editor of Morningstar Mutual Funds. Theabove opinions are those of the author and not of BIZ Experiences.These investment vehicles may not be right for you. Carefullyinvestigate before investing.
