Some Little Funds That Deserve Big Attention

WASHINGTON -- Ever heard of the Spectra Fund? How about Interactive Investments' Technology Value? White Oak Growth Stock? Barr Rosenberg International Small Capitalization? Or Schroder U.S. Smaller Companies Fund?


The odds are that you don't know any of these tiny funds, which are not routinely listed in newspapers.


Perhaps you should.


Some of these open-end funds boast five-star ratings from Morningstar Inc., a Chicago-based mutual-fund-research company. Others are too young to be rated but have significantly beaten the market. Most are run by experienced money managers making their talents available to the public only recently.


More than 30 percent of 8,300 U.S. mutual funds don't appear in even the most comprehensive newspaper listing of mutual-fund prices, said Norman Fosback, editor in chief of Mutual Funds magazine.


The National Association of Securities Dealers does not distribute to the media price quotes for funds with less than $25 million in assets or fewer than 1,000 shareholders. Consequently, complains Fosback, investors are denied even rudimentary information about some of the most exciting funds.


The NASD says it has no plans to make inclusion in its media list any easier. Recently, however, NASD directors did vote to make information on 1,400 more small mutual funds available to stockbrokers and financial planners through NASD's computer database.


If the Securities and Exchange Commission ratifies the decision, by early 1997 investors will be able to get daily prices for these funds through their brokers or financial planners, or on the Nasdaq stock market's World Wide Web site.


The criterion for inclusion on this "supplemental" list will be $10 million in assets or a two-year operating history.


The move to include small funds reflects their proliferation during the decade-old bull market that has seen Americans take their savings out of banks and put the money into the market. All that cash has attracted hundreds of entrepreneurs hoping to cash in on America's love affair with stocks.


One Lilliputian fund of note is Interactive Investments' Technology Value fund, a two-year-old fund with $21 million in assets that has gained 60 percent so far this year, according to the company. Last year, which included a terrible second half for tech stocks, the fund gained 61 percent, according to Lipper Analytical Services Inc., a mutual-fund-research company.


Since its inception in June 1994, the fund's net asset value has risen 200 percent -- more than double the showing of the average technology fund and triple the rise in the Standard & Poor's 500-stock index, according to Morningstar.


Some other small funds spotted by Morningstar are sponsored by experienced investment firms.


One is the $11 million Spectra Fund, managed by David Alger, president and chief investment officer of the New York investment firm Fred Alger Management Inc., which oversees about $7 billion for pension funds and wealthy families. Spectra Fund gets a five-star rating from Morningstar for its three-year, five-year and 10-year performance.


White Oak Growth Stock Fund is another successful fund overseen by a longstanding institutional money manager, Oak Associates Ltd. of Akron, Ohio. By investing in medium and large companies with good earnings potential, White Oak has bested the S&P 500 in the past three years, manager Jim Oelschlager said.