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Rating:New Fund Shop Opens Not Rated 2.8 Email Routing List Email & Route  Print Print
Friday, February 14, 2003

New Fund Shop Opens

by: Sean Hanna, Editor in Chief

Even a tough bear market will not deter the most optimistic among us. Just ask Thomas J. Runkel. The 43-year-old recently pulled up stakes at Franklin Templeton after eighteen years to start his own fund shop. Runkel had most recently managed money market assets for Franklin, but decided to try his hand at the helm of an equity fund anyway.

"It may be a tough time to start a fund in the short term, but when you have sell-offs is when you should be looking for values," explained the founder of the Belmont, California-based firm. He also believes this experience evaluating the creditworthiness of companies gives him an edge in running a multi-cap value fund in this market. "Behind every security -- a stock or a bond -- there is a company. I have 15 years analyzing companies and have seen market cycles," says Runkel.

He is also positioning the fund as an advisor-friendly offering by holding down portfolio turnover and expenses. "We invest in a smaller number of stocks, for longer period of time, with low expenses, and my own money is in the fund," is how Runkel sums up the effort. Currently he has the $1.3 million in assets in the fund invested in just 18 stocks, the portfolio's turnover ratio is just 20 percent turnover. The typical fund owns 150 stocks with 145 or so basis points and 90 percent turnover.

Runkel said that he is committed to holding the expense ratio at 100 basis points during at least the first two years, then he will "see what happens." According to the most recent prospectus, the fund expense ration is 284 basis points and Runkel Advisors waives 184 basis points. The fund prospectus also permits a 12b-1 charge, which Runkel does not levy. "The whole premise of the fund is to keep expenses low."

He is also watching the costs of distributing the fund. For some of the same reasons that the fund sports a low expense ratio, Runkel also decided to keep investors' costs down by selling the fund no-load with no 12b-1 fee.

The fund is currently offered through Brown & Company and Bidwell and was recently added to the Fund/SERV platform. The fund is also in negotiations with Ameritrade to join that platform and Runkel expects to eventually offer the fund through TD Waterhouse. In each of those cases, Runkel said the fund would not be part of a no-transaction fee market. Unified Fund Services provides shareholder services for the fund. 

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