The Feeling Is Mutual

A bevy of black-managed mutual funds is bringing new investors into the market, B.E. checks out what they have to offer.

their funds. “We had to stand out to make it this far,” says Chapman, “so you know not one of us is taking a passing fancy to the business.”

We’ve put together a brief description of the funds, along with contact numbers you’ll need to invest.
Ariel Appreciation Ariel Growth Ariel Premier Bond 800-292-7435
You can say this much about John Rogers: he sticks to what he believes. Rogers’ Growth fund buys small company stocks but sidesteps tech shares, opting instead for low-risk consumer goods companies. The strategy helped Rogers bypass his peers the fund’s first three years, but be later came under question when Ariel missed out on the gains many software shares logged in the early 1990s. Fast forward to 1997, and Ariel’s equity funds have rebounded quite nicely. Last year, Ariel Growth posted a total return of 23.51%, and so far this year has gained 18.53%. Ariel Growth’s biggest holdings include Interface, the world’s leading manufacturer of carpet tiles, and Ecolab, which makes cleaning products for hospitality markets.

Although Ariel Appreciation is a variation on Rogers’ old theme, it also buys into large-cap stocks. Manager Eric McKissack keeps to the same Ariel formula, and posted a total return of 23.72% last year and 18.9% during the first half of 1997. McKissack likes stocks trading at a 80% discount to the market’s price-to-earnings ratio (P/E) and, like Rogers, favors companies with a strong consumer franchise when possible. The fund’s largest holdings include Rouse, a shopping mall developer and Specialty Equipment, which makes restaurant equipment, including grills and ice cream machines for McDonald’s.

Just like its fixed-income peers, Ariel Premier Bond fund has found its first year to be rough so far. Mid-year, it had a total return of a little over 4%. The fund, however, has found mortgage securities a good bet and has honed in on Fannie Mae. Questions still remain as to how or when the Federal Reserve will handle interest rates, uncertainty that the fund’s subadvisors Lincoln Capital Management, see as reason to stay in short maturities.

Brown Equity Brown Balanced Brown Small Company 800-525-3863
Not long ago, you needed at least $5 million to tap into Eddie Brown’s knack for stock picking, a price of admission that reserved his expertise for pension funds. These days, Brown’s turning more of his attention toward individual investors. He’s lowered the minimum initial investment required for his funds to $10,000, and the talk around the Baltimore money manager’s office is that the company might soon launch a new fund with an even lower entry price. Brown’s forte has been mid- to large-cap stocks, as well as small companies. He looks for companies with good earnings increases carrying a P/E ratio not too far from the market’s average. His balanced fund adds a dash of bonds to the mix. Brown’s large company favorites currency include Cisco Systems and Chase Manhattan, as well as Home Depot. The small company fund, meanwhile, has stocked up on companies such as BMC Software and fellow

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