It takes an experienced hand to navigate today's turbulent markets. But if you're looking for a mutual fund that will see you through the morass, don't just look at funds with long track records. Often these are victims of their own success, having become so popular that their asset levels are bloated. As a result, managers may not be able to maneuver portfolios nimbly enough to sidestep downturns and may also miss out on potential buying opportunities.A better strategy may be to buy a new fund launched by an old hand. Many veterans who have long overseen private and institutional money successfully are diversifying and building their brands by launching retail funds.
Consider, for instance, Prospector Funds in Guilford, Conn., which manages $3.5 billion, primarily for two institutional clients. Launched in September, 2007, its two retail funds, Prospector Capital Appreciation (PCAFX) and Prospector Opportunity (PQPFX), have only a combined $17million. The managers, however, have a huge amount of experience. John D. Gillespie founded Prospector Partners in 1997 and manages the stock portfolios of OneBeacon Insurance (OB) and White Mountains Insurance, which has a long-term association with Warren Buffett's Berkshire Hathaway. (Gillespie is a director of White Mountains.) Prior to founding Prospector, Gillespie worked for Buffett's Geico as a senior financial analyst and was a manager of several T. Rowe Price (TROW) funds.
Gillespie's co-managers are equally impressive. Richard P. Howard, lead manager of Prospector Capital Appreciation, headed up T. Rowe Price Capital Appreciation from 1989 through 2001 and was an analyst with the fund from its 1986 inception. During his tenure, the fund had one down year, a 1.3% drop in 1990. Kevin R. O'Brien, who heads Prospector Opportunity Fund, worked for Neuberger Berman from 1996 through 2003, co-managing Neuberger Berman Genesis, a top-performing small-cap fund.
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