A terrific fund family you may never have heard of

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I’ll give you some clues about this little-known, remarkable mutual-fund family.

It’s no-load. You can buy shares directly, without paying a sales charge.

Four of its 11 funds rated by Morningstar get five stars, the highest rating.

The minimum first investment is only $2,000.

Three of the 11 funds are Morningstar’s analyst picks.

The investment company itself is entirely owned by its fulltime employees.

There are no star managers. Every fund is run by a team.

All key team members own shares in the advisory firm.

The funds buys growth and value and anything else – they’re all-cap; they seek absolute returns, not relative returns – meaning that they are out to make money, not just to beat an index.

A team of economists checks individual stock selections.

The fund family is Manning & Napier, headquartered in Fairport, New York. (Truthfully, had you ever heard of it?)

The management firm was first launched in 1970, 40 years ago, by Bill Manning and the late Bill Napier. It’s mainly known to institutional investors, says CEO Patrick Cunningham, not to retail (you and me). The firm handles $25 billion, much of it in separately managed accounts.

Its first fund was launched in 1993, and today four of the offerings are life-strategy funds: They give you an entire portfolio in one package.

The four are Pro-Blend Maximum Term, Pro-Blend Extended Term, Pro-Blend Moderate Term, and Pro-Blend Conservative Term. They differ, of course, in their asset allocations, but their holdings overlap a lot. Besides which, Manning & Napier can significantly alter the funds’ asset allocations.

Pro-Blend Max is 70-95 percent in stocks, Pro-Blend Extended is 40-70 percent, Pro-Blend Moderate is 20-60 percent, and Pro-Blend Conservative is 5-35 percent.

Manning & Napier also offers target retirement funds, which automatically become more conservative (less exposed to stocks) as the investor grows older.

A team of nine senior people decides whether or not to buy stocks recommended by the 60 research analysts. Among the nine: three economists, who engage in top-down analysis – deciding whether the broad economic outlook favors or frowns on particular stocks and industries.

The average tenure of the nine senior people: 17 years.

Why the team approach? Cunningham gives two reasons: 1. No one can know the entire investment universe. It’s hard for one person to cover just one industry. 2. If the lone star manager leaves, his or her outstanding track record may become moot.

The folks at Manning & Napier seem to be doing something right. Morningstar’s analysts positively dote on most of the funds, with comments like Strong stock-picking is the secret, Incredibly consistent, and outperforms in both bull and bear markets.

I myself like the team approach – despite all the skepticism about committee decisions. I used to conduct Delphi polls, asking a group of experts a series of questions. They then had the chance to change their answers – after seeing the answers of the other experts. Presumably, they moved to the majority view when they weren’t sure. Delphi polls, I’m told, have proven to be remarkably accurate.

Anyway, one Manning & Napier fund has disappointed: Manning & Napier SmallCap A. It gets a measly one star from Morningstar – not surprising, because it lost 48.39 percent last year. But the fund has changed its strategy and now concentrates on its favorite stocks rather wandering all over the place. Morningstar believes it’s heading in the right direction. Evidence: This year, the fund is up around 40 percent.

Anyway, are you as impressed by Manning & Napier as I am? Its confident, unusual approach to investing and its fine record? Funds like these should help diversify almost any portfolio. Phone: 800-466-3863.

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