After quarters of struggling small-cap stocks and heavy outflows,
Jones and Babson are reopening the
The Babson Enterprise Fund, a small-cap value fund, to new investors for the first time in seven years.
The decision to open the stock was "based on the opportunities in small-cap investing -- we no longer think we will have a problem putting the money to work,"
Carter Newbold, associate portfolio manager said.
The Enterprise Fund was originally launched in December 1983 and closed to new investment in January 1992 due to limited capacity. As of June 30, 1999 the fund had over $155 million in assets under management.
The fund was hit hard with losses in the fourth quarter of last year and the first quarter of this year, Newbold said. In the first half of 1999 ending June 30, the fund was down 13.18% and $24 million flowed out of the fund following $15 million in outflows in 1998 and $29 million in outflows in 1999.
The fund's performance has since picked up strongly. Since March 31 the fund is up 18.9% while the Russell 2000 is up 12% and the S&P 500 is up 6%, Newbold said.
"We really feel good about the companies we own. If you look at their earnings growth they are up at an average of 19%," Newbold said. "In the past 90 days, five out of our 75 holdings were taken out because of acquisition activity."
The managers are taking advantage of this acquisition activity and looking to replace them with companies with good growth valuations, Newbold said.
He also said that the fund would consider re-closing if it reached $275 million. "Hopefully we will have larger amounts of inflows but I am not worried about drowning in money right now."
Now the challenge will be attracting new investors. The fund is going to rely heavily on public relations,
Claire Panzero, marketing communications manager said. The marketing will focus on the advisory side of the market. Babson funds will also be represented at the
IAFP Conference (International Association for Financial Planning).
Advertising decisions still have not been made, Panzero said.
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