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Buried Treasures

Bridgeway Aggressive Growth and Harbor Value make our short list.

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A needle in a haystack. A four-leaf clover. A comfortable pair of high heels. Sure, these things are hard to find. But a sensible mutual fund with a good long-term record, a manager who's been around for a while, and low expenses--and that hasn't yet attracted the masses? Finding one of those can be an even bigger challenge.

As tough as it may be to find such a gem, the journey is worth taking. Unfortunately, investing offers few--if any--guarantees, but there's evidence that asset size can burden portfolio managers, whereas small funds are more nimble. If you're interested in investing in IPOs, that agility is a must. But even funds that avoid new issues benefit from a smaller asset base. For starters, small funds usually don't have to worry about moving stock prices when they make transactions. What's more, it's easier to maintain a market-cap focus, especially for those investing in small-cap stocks.

Bridget B. Hughes does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.