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Montgomery Funds Rolls Out Focused Mid-Cap Fund

Catherine Valenti

Jumping aboard one of the year's better-performing segments of the market, Montgomery Funds has launched the Montgomery Mid-Cap 20 Portfolio, which will invest in a concentrated portfolio of U.S. mid-cap companies, the fund shop said Friday.

The fund will hold about 20 to 30 stocks and will invest primarily in companies whose shares have a market capitalization profile consistent with the S&P 400 Mid-Cap Index. The index had a weighted average market capitalization of $2.14 billion and a median of $1.62 billion on June 30. Montgomery's Small Cap Equity team of Jerome "Cam" Philpott, Paul LaRocco and Charles I. Reed will manage the fund.

There's been a slew of new funds with concentrated portfolios launched in recent years, as many fund families try to capitalize on the success of funds like (JAVLX - Cramer's Take - Stockpickr)Janus Twenty. But while investing in a concentrated group of stocks can bring high returns, the strategy can also give investors a rocky ride.

Montgomery's new fund has an expense ratio of 1.4% -- slightly lower than the category average of 1.56% according to Morningstar -- and a management fee of 1%. The minimum investment is $2,500, or $1,000 if investors open their accounts online, according to a spokeswoman for the San Francisco-based asset management firm.